Facts and figures on Unemployment and Inflation

Question 1

What was Reagan’s first aim as President and what did he do about it?

Answer 1

• To stop inflation
• While ORA and ERTA were going through Congress, he put pressure on the Federal Reserve Board (FRB) to put tighter restrictions on the money supply

Question 2

What did Reagan’s administration do that the previous administrations didn’t?

Answer 2

The Reagan administration put tighter restrictions on the money supply and didn’t then ask the FRB to reduce these restrictions when unemployment rose

Question 3

What did the money supply restriction lead to?

Answer 3

• A sharp rise in interest rates
• This hurt industries that had to buy supplies on credit, e.g. the car industry and farming, or had loans with a long back-pay period like construction

Question 4

When did Reagan become president?

Answer 4

• Elected in 1980, became President in January 1981
• Reagan came to power in the middle of a recession

Question 5

How were unemployment figures impacted when Reagan was President?

Answer 5

Unemployment rates went from 7.1% of the population available for work in 1980 to a high of 9.6% in 1983

Question 6

How were inflation figures impacted when Reagan was President?

Answer 6

• Inflation, which had been 11.3% in 1979 and 13.5% in 1980 went down to 6.2% in 1982
• Although it went up and down after this, by 1996 it had never reached double figures again and spent most of its time at under 5%