Inflation in the 1970s

Inflation in the 1970s Monetary policy During inflation, the economy overheats, as the aggregate demand surpasses the level of economic growth. Thereby, the central bank plays a major role in employing the monetary policy, which encourages more saving than spending (Barsky and Lutz 18).Advertising We will write a custom term paper sample on Inflation in the 1970s specifically for you for only $16.05 $11/page Learn More The most appropriate method is increasing interest rates, where, borrowing becomes very expensive, and people resolve to save instead of borrowing and spending money recklessly. Essentially, there is an increase in the opportunity cost of spending, and homeowners with mortgage find it too expensive to service their mortgage loans. With a decrease in borrowings, the real money supply in the economy reduces significantly. Companies also find it very expensive to borrow monies from banks, thus, they end up making very few investments. Moreover, when the interest rate i s significantly high, the exchange rate increases, and the inflation pressures reduce. This reduces the demand for exports and makes imports slightly inexpensive. The situation becomes very difficult, as some businesses experience losses in some of their investment projects. The entire scenario leads to an aggregate decrease in demand, where, buyers barely have enough money to spend, and the sellers have to reduce the prices of their products to obtain customers. Monetary policy is very effective in keeping inflation under control, as long as the interest rates are high. Fiscal policy The fiscal policy targets the demand side, and its effects to the economy resemble those of the monetary policy. During inflation, the government aims at reducing the flow of money in the economy by increasing direct taxes to the citizens. This approach helps in reducing the amount of disposable income, as the citizens have to pay high taxes for every income that they earn or spend. High income taxes a nd high value added taxes play a significant role in reducing consumer spending.Advertising Looking for term paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Such a scenario aids and maintain steady budgeting, and thus, it supports economic growth in a given nation. The increased tariffs escalate the leakage rates, and the consumers are left with barely enough money to spend. Another approach of employing the fiscal policy is through the reduction of government spending in the economy. In such a case, the reduced injections into the circular flow of the economy trim down the demand, which reduces inflation, and the general growth of the economy reduces significantly. Exchange rate policy Whenever the value of a currency appreciates, the exports become expensive, where, the volume of exports reduce significantly. Moreover, the aggregate demand for exports reduces significantly, and the firms in the countr y have to reduce their prices to remain competitive in the global market. Whenever the currency in a particular nation is high, the import prices reduce significantly; therefore, firms that depend on imported raw materials experience reduced manufacturing costs. With that, the firms can sell their products at low prices, and still make profits. Income policy Direct wage control is an important aspect of fiscal policy because it sets limits of wage bill and decrease expenditure in the government. A government experiencing inflation can restrict pay rise for government employees to cut on its expenditures. Moreover, the government can go ahead and persuade private sector employers to control their wage levels. Despite the fact that low wage growth moderates inflation rate and reduces forces of inflation, it does not control inflation rate effectively. Labour market and supply side policies Reducing persistent uncompetitive markets and creation of flexible labour markets would play a g reat role in reducing inflationary pressures. The government can take part in weakening labour unions and encouraging part-time employment.Advertising We will write a custom term paper sample on Inflation in the 1970s specifically for you for only $16.05 $11/page Learn More Although flexible labour markets lead to an increase in job insecurity, the increased flexibility in the labour markets would play a great role in helping firms to reduce their labour costs and thus reduce inflationary pressures. The lower cost per unit of production would enable firms to achieve economic growth without necessarily increasing their prices. Economic policies that controlled inflation in the 1970s The United States experienced a period of stagflation in the 1970s, where, the economic growth rate was slow and the inflation rates were considerably high. However, Milton Friedman, an American economist, believed that monetary supply was the issue affecting the economy. He ther efore insisted that the monetary policy would play a significant role in combating inflation of the 1970s. In 1979, Paul Volcker, the Federal Reserve Chairperson, employed the monetary policy, which played a great role in reducing inflation. The increment of interest rates provides a way for the government to discourage spending and borrowing. In the middle part of 1970s, the interest rates increased to about 12%, as there was an excessive growth in the economy (Biven 28). Citizens resolved to save, and the real money supply in the economy reduced significantly. Although the monetary policy was the basis of the severe 1981-1982 recession period, it played a great role in combating the inflation of the 1970s. Phillips curve and its application in the 1970s inflation Phillips curve seeks to analyse the macro-economic situation and explain the correlation between inflation levels and the unemployment levels in any given economy. Since its implementation, the Philips curve has played a great role in managing the trade cycle, where, it helps policy makers to manage aggregate demand whenever the economy encounters high unemployment rates, inflation, and severe recession periods. Essentially, the Philips curve indicated that wage inflation and unemployment levels have an inverse relationship. It is evident that changes in the levels of unemployment determine the price inflation levels in any economy. If, for example, there is an increase in the demand for labour, the unemployment levels fall, as firms raise their wages to compete for the few labourers available. During the inflation period of the 1970s, the government had to select the most appropriate rate of inflation and work towards achieving it. Friedman studied the Phillips curve carefully, and discovered that the economy consisted of a series of short run Phillips curves that explained the natural rate of unemployment.Advertising Looking for term paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The short run Phillips curves played a great role in determining the existing inflation rate. Indeed, the entire period running through 1970-1979 had three short run Phillips curves that explained the upward shift of inflation expectations during the period. While applying Milton Friedman’s monetary policy, the Phillips curve was imperative, and the economists had to contract or expand the economy accordingly to achieve the most appropriate rate of inflation (Marvin and King 993). The Phillips curve was imperative in incorporating the negative supply shocks experienced during the inflation period. Therefore, although the stagflation period presented a breakdown of the Phillips curve in the 1970s, the curve had some relevance in achieving the monetary policy that combated the great inflation. Barsky, Robert and Kilian Lutz. A Monetary Explanation of the Great Stagflation of the 1970s. Michigan: University of Michigan, 2010. Print. Biven, Carl. Jimmy Carter’s Economy: P olicy in an Age of Limits. North Carolina: University of North Carolina Press, 2002. Print. Marvin, Goodfriend and Robert King. The Incredible Volcker Disinflation. Journal of Monetary Economics 52.1 (2005): 981-1015. Print. Appendix 1: Phillips curve shifts, 1970-1979

USS Texas (BB-35) Battleship in World War II

USS Texas (BB-35) Battleship in World War II USS Texas (BB-35) was an New York-class battleship that was commissioned into the U.S. Navy in 1914. After taking part in the American occupation of Veracruz later that year, Texas saw service in British waters during World War I. Modernized in the 1920s, the battleship was still in the fleet when the United States entered World War II following the Japanese attack on Pearl Harbor. After performing convoy duty in the Atlantic, Texas took part in the invasion of Normandy in June 1944 and the landings in  southern France later that summer. The battleship was transferred to the Pacific in November 1944 and aided in the final campaigns against the Japanese, including the invasion of Okinawa. Retired after the war, it is presently a museum ship outside Houston, TX. Design Construction Tracing its origins to the 1908 Newport Conference, the  New York-class of battleships was the U.S. Navys fifth type of dreadnought after the South Carolina- (BB-26/27), Delaware- (BB-28/29), Florida- (BB-30/31), and Wyoming-classes (BB-32/33). Central among the conferences findings was the requirement for ever larger calibers of main guns as foreign navies had begun using 13.5 guns. Though discussions commenced regarding the armament of the Florida- and  Wyoming-class ships, their construction advanced using the standard 12 guns. Complicating the debate was the fact that no U.S. dreadnought had entered service and designs were based on theory, war games, and experience with pre-dreadnought ships. In 1909, the General Board pushed forward designs for a battleship mounting 14 guns. A year later, the Bureau of Ordnance successfully tested a new gun of this size and Congress authorized the building of two ships. Shortly before construction began, the U.S. Senate Naval Affairs Committee attempted to have the size of the ships reduced as part of an attempt to cut the budget. These efforts were thwarted by Secretary of the Navy George von Lengerke Meyer and both battleships moved forward as originally designed. Named USS  New York  (BB-34) and USS  Texas  (BB-35), the new ships mounted ten 14 guns in five twin turrets. These were situated with two forward and two aft in superfiring arrangements while the fifth turret was placed amidships. The secondary battery consisted of twenty-one 5 guns and four 21 torpedo tubes. The tubes were situated with two in the bow and two in the stern. No anti-aircraft guns were included in the initial design, but the rise of naval aviation saw the addition two 3 guns in 1916. USS Texas (BB-35) during sea trials, 1913.   U.S. Navy Propulsion for the  New York-class ships came from fourteen Babcock Wilcox coal-fired boilers powering dual-acting, vertical triple expansion steam engines. These turned two propellers and gave the vessels a speed of 21 knots.  The New York-class was the last class of battleships designed for the US Navy to utilize coal for fuel. Protection for the ships came from a 12 main armor belt with 6.5 covering the vessels casemates.   Construction of Texas was assigned to the Newport News Shipbuilding Company after the yard submitted a bid of $5,830,000 (exclusive of armament and armor). Work began on April 17, 1911, five months before New York was laid down in Brooklyn. Moving forward over the next thirteen months, the battleship entered the water on May 18, 1912, with Claudia Lyon, daughter of Colonel Cecil Lyon of Texas, serving as sponsor. Twenty-two months later, Texas entered service on March 12, 1914,  with Captain Albert W. Grant in command.  Commissioned a month earlier than New York, some initial confusion arose regarding the name of the class. USS Texas (BB-35) Nation:  United StatesType:  BattleshipShipyard:  Newport News ShipbuildingLaid Down:  April 17, 1911Launched:  May 18, 1912Commissioned:  March 12, 1914Fate:  Museum ship  Specifications (as built)Displacement:  27,000  tonsLength:  573  ft.Beam:  95.3  ft.Draft:  27  ft., 10.5 in.Propulsion:  14  Babcock and Wilcox  coal-fired boilers  with oil spray, triple expansion steam engines turning two propellersSpeed:  21  knotsComplement:  1,042  menArmament (as built)10  Ãƒâ€"  14-inch/45  caliber guns21 Ãâ€"  5/51 caliber guns4 Ãâ€" 21  torpedo tubes Early Service Departing Norfolk, Texas steamed for New York where its fire control equipment was installed. In May, the new battleship moved south to support operations during the American occupation of Veracruz. This occurred despite the fact that the battleship had not conducted a shakedown cruise and post-shakedown repair cycle. Remaining in Mexican waters for two months as part of Rear Admiral Frank F. Fletchers squadron, Texas briefly returned to New York in August before commencing routine operations with the Atlantic Fleet. In October, the battleship again arrived off the Mexican coast and briefly served as station ship at Tuxpan before proceeding to Galveston, TX where it received a set of silver from Texas Governor Oscar Colquitt. After a period in the yard at New York around the turn of the year, Texas rejoined the Atlantic Fleet. On May 25, the battleship, along with USS Louisiana (BB-19) and USS Michigan (BB-27), rendered aid to the stricken Holland-America liner Ryndam which had been rammed by another vessel. Through 1916, Texas moved through a routine training cycle before receiving two 3 anti-aircraft guns as well as directors and rangefinders for its main battery. World War I In the York River when the United States entered World War I in April 1917, Texas remained in the Chesapeake until August conducting exercises and working to train Naval Armed Guard gun crews for service about merchant vessels. After an overhaul at New York, the battleship moved up Long Island Sound and on the night of September 27 ran hard aground on Block Island. The accident was the result of Captain Victor Blue and his navigator turning too soon due to confusion regarding shore lights and the location of the channel through the mine field at the east end of Long Island Sound. USS Texas (BB-35) at Hampton Roads, VA, 1917.   U.S. Navy Pulled free three days later, Texas returned to New York for repairs. As a result, it was unable to sail in November with Rear Admiral Hugh Rodmans Battleship Division 9 which departed to reinforce Admiral Sir David Beattys British Grand Fleet at Scapa Flow. Despite the accident, Blue retained command of Texas and, due to connections to Secretary of the Navy Josephus Daniels, avoided a court-martial over the incident. Finally crossing the Atlantic in January 1918, Texas reinforced Rodmans force which was operating as the 6th Battle Squadron. While abroad, the battleship largely aided in protecting convoys in the North Sea.  On April 24, 1918, Texas sortied when the German High Seas Fleet was spotted moving towards Norway. Though the enemy was sighted, they could not be brought to battle. With the end of the conflict in November, Texas joined the fleet in escorting the High Seas Fleet into internment at Scapa Flow. The following month, the American battleship steamed south to escort President Woodrow Wilson, aboard the liner SS George Washington, into Brest, France as he traveled to the peace conference at Versailles. Interwar Years  Ã‚  Ã‚   Returning to home waters, Texas resumed peacetime operations with the Atlantic Fleet. On March 10, 1919, Lieutenant Edward McDonnell became the first man to fly an aircraft off an American battleship when he launched his Sopwith Camel from one of Texas turrets. Later that year, the battleships commander, Captain Nathan C. Twining, employed aircraft to spot for the vessels main battery.  Findings from these efforts supported the theory that air spotting was far superior to shipboard spotting and led to floatplanes being placed aboard American battleships and cruisers. In May, Texas acted a plane guard for a group of US Navy Curtiss NC aircraft that were attempting a trans-Atlantic flight. That July, Texas transferred to the Pacific to begin a five-year assignment with the Pacific Fleet.  Returning to the Atlantic in 1924, the battleship entered Norfolk Navy Yard the following year for a major modernization. This saw the replacement of the ships cage masts with tripod masts, installation of new oil-fired Bureau Express boilers, additions to the anti-aircraft armament, and placing of new fire control equipment. USS Texas (BB-35) undergoing modernization at Norfolk Navy Yard, 1926. National Archives and Records Administration Completed in November 1926, Texas was named flagship of the U.S. Fleet and commenced operations along the East Coast. In 1928, the battleship transported President Calvin Coolidge to Panama for the Pan-American Conference and then proceeded into the Pacific for maneuvers off Hawaii.  Following an overhaul at New York in 1929, Texas spent the next seven years moving through routine deployments in the Atlantic and Pacific.   Made flagship of the Training Detachment in 1937, it held this role for a year until becoming flagship of the Atlantic Squadron. During this period, much Texas operations centered on training activities including serving as a platform for midshipmen cruises for the U.S. Naval Academy. In December 1938, the battleship entered the yard for installation of the experimental RCA CXZ radar system. With the beginning of World War II in Europe, Texas received an assignment to the Neutrality Patrol to aid in safeguarding the western sea lanes from German submarines.  It then began escorting convoys of Lend-Lease material to the Allied nations. Made flagship of Admiral Ernest J. Kings Atlantic Fleet in February 1941, Texas saw its radar systems upgraded to the new RCA CXAM-1 system later that year.  Ã‚   World War II At Casco Bay, ME on December 7 when the Japanese attacked Pearl Harbor,  Texas  remained in the North Atlantic until March when it entered the yard. While there, its secondary armament was reduced while additional anti-aircraft guns were installed.  Returning to active duty, the battleship resumed convoy escort duty until the fall of 1942. On November 8, Texas  arrived off Port Lyautey, Morocco where it provided fire support for Allied forces during the Operation Torch landings. It remained in action until November 11 and then returned to the United States.  Reassigned to convoy duty,  Texas  continued in this role until April 1944.   Remaining in British waters, Texas  commenced training to support the planned invasion of Normandy.  Sailing on June 3, the battleship pummeled targets around Omaha Beach and Pointe du Hoc three days later.  Providing intense naval gunfire support to Allied troops hitting the beaches,  Texas fired on enemy positions throughout the day. The battleship remained off the Norman coast until June 18 with its only departure a short run to Plymouth to rearm. USS Texas (BB-35) at sea, December 1942. National Archives and Records Administration Later that month, on June 25,  Texas, USS  Arkansas  (BB-33), and USS  Nevada  (BB-36) attacked German positions around Cherbourg. In exchanging fire with enemy batteries,  Texas sustained a shell hit which caused eleven casualties. Following repairs, at Plymouth the battleship began training for the invasion of southern France. After shifting to the Mediterranean in July,  Texas  approached the French coast on August 15. Providing fire support for the Operation Dragoon landings, the battleship struck targets until Allied troops advanced beyond range of its guns. Withdrawing on August 17,  Texas  sailed for Palermo before later departing for New York. Arriving in mid-September, the battleship entered the yard for a brief overhaul.  Ordered to the Pacific,  Texas sailed in November and touched in California before reaching Pearl Harbor the following month.  Pressing on to Ulithi, the battleship joined Allied forces and took part in the Battle of Iwo Jima in February 1945. Leaving Iwo Jima on March 7,  Texas  returned to Ulithi to prepare for the invasion of Okinawa. Attacking Okinawa on March 26, the battleship pounded targets for six days before the landings on April 1.  Once the troops were ashore,  Texas stayed in the area until mid-May providing fire support. Final Actions Retiring to the Philippines,  Texas  was there when the war ended  on August 15.  Returning to Okinawa, it remained there into September before embarking American troops for home as part of Operation Magic Carpet. Continuing in this mission through December,  Texas then sailed for Norfolk to prepare for deactivation. Taken to Baltimore, the battleship entered reserve status on June 18, 1946. The following year, the Texas Legislature created the Battleship Texas  Commission with the goal of preserving the ship as a museum. Raising the necessary funds, the Commission had  Texas  towed to the Houston Ship Channel near the San Jacinto Monument. Made flagship of the Texas Navy, the battleship remains open as a museum ship.  Texas was formally decommissioned on April 21, 1948.