The Modern Era In the 1950s, the economy continued to expand. Four recessions occurred during the 50s and 60s, but they were mild. When the level of economic activity declines for at least a six-month period, the economy is said to be in recession. Employment and the production of goods and services are generally down during a recession. During the 1950-85 period, Americans became familiar with and enjoyed new shopping malls, high-technology consumer goods (such as microwave ovens), new educational opportunities, improved health care, and many other new commodities and services. At the same time, Americans became quite familiar with the term inflation, which refers to a period of rising prices, or a decline in the purchasing power of the dollar (the dollar buys less). In the 60s and 70s, the government examined the inflation problems facing citizens and began to play a larger role in the economy. President John F. Kennedy's New Frontier and President Lyndon B. Johnson's Great Society meant more government involvement in business. A major part of the New Frontier concept was the cutting of personal income tax to stimulate consumption, investment, and employment and to hold inflation at a reasonable level. The Great Society programs included medical aid to older Americans, improved product safety, and improved housing. The 1970s were highlighted by change. In 1974, following the oil price shock of 1973, a major recession hit the United States. The Organization of Petroleum Exporting Countries (OPEC) had quadrupled oil prices in fall 1973, right at a time of double-digit inflation. Our economic growth had stalled. Thus, Americans were faced with stagflation, a stalled economy (stagnation) with rising prices (inflation). In 1981 Ronald Reagan replaced Jimmy Carter as president, facing high interest rates, high inflation, high unemployment, and little productivity growth. He instituted supply-side economics. Supply-side economists believed the government had become too involved in business; they attempted to get the government out of the way by reducing taxes and government rules and regulations- The objective was to raise the total amount of goods and services produced. Supply-side economists believed high tax rates reduce a worker's incentive to work hard. A person faced with higher taxes is just not going to work hard to produce. President Reagan initiated tax cuts, which caused inflation to subside. Unemployment rates dropped from 11 percent to 6 percent. However, although inflation was brought under control, the supply-side approach did not lead to the rapid rate of economic growth its advocates had expected. A summary of the main economic events from President Roosevelt to President Bush appears in Table 1-4. (未完待续)