Question

When was the Great Inflation and why did it occur?

When was the Great Inflation and why did it occur?

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Answer #1

Great inflation was the period of double digits inflation in United States which began in 1972 during and continued tilll early 1980's with inflation touching 20% in 1980. The major factor attributed to the great inflation is the expansionary policy adopted by Nixon and Nixon supported Fed during the time since Nixon was seeking re-election at that time and needed to boost the economic growth after a period of recession in late 60's Hence, money supply was increased significantly during the period which caused the sudden increase in inflation also supported by the oil price hike during the time.

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