The Great Inflation: A Historical Overview and Lessons Learned

All inflation isn't bad—a moderate amount can signal a healthy economy. But high inflation, such as that during the Great Inflation, can lead to a vicious cycle where expectations of higher inflation lead to further increases in the price level.

The Great Inflation, which started in the mid-1960s, lasted for almost two decades and only began to dissipate in the early 1980s. Inflation ticked up throughout the 1970s until the Fed, under Chairman Paul Volcker, took drastic measures to promote greater price stability.

Read this Page One Economics® issue to find out the history of the Great Inflation: what caused it, how tough (and painful) monetary policy brought it to an end, and two key lessons learned that remain relevant today.

Teachers: Visit the Reading Q&As in our Econ Lowdown Teacher Portal to find the teacher edition for this issue, to assign an online version of the student materials and to collect student scores on the questions. The materials are still free—but having them in the portal keeps students from accessing the answer key.

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Education Level: 9-12 College
Subjects: History AP Economics Economics
Concepts: Monetary Policy Federal Reserve System-functions Unemployment Inflation/Deflation
Resource Types: Publication Lesson
Languages: English
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