FIGURE 29.2 The Inflation Rate, 1960–2000
The impact of the oil crisis of 1973 on the inflation rate appears all too graphically in this figure. The dip in 1974 reflects the sharp recession that began that year, after which the inflation rate zoomed up to a staggering 14 percent in 1980. The return to normal levels after 1980 stemmed from very harsh measures by the Federal Reserve Board, which, while they succeeded, came at the cost of a painful slowdown in the economy.