Essay About Economy In U S A

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After that consumer prices were relatively constant and actually fell slightly from 1926 to 1927 and from 1927 to 1928. As European production began to recover after the war prices began to fall.

Though the prices of agricultural products fell from 1919 to 1920, the depression brought on dramatic declines in the prices of raw agricultural produce as well as many other inputs that firms employ.

Price changes during the 1920s are shown in Figure 2.

The Consumer Price Index, CPI, is a better measure of changes in the prices of commodities and services that a typical consumer would purchase, while the Wholesale Price Index, WPI, is a better measure in the changes in the cost of inputs for businesses.

This is unfortunate because the 1920s are a period of vigorous, vital economic growth.

It marks the first truly modern decade and dramatic economic developments are found in those years.

(Historical Statistics of the United States, or HSUS, 1976) Real GNP per capita grew 2.7 percent per year between 19.

By both nineteenth and twentieth century standards these were relatively rapid rates of real economic growth and they would be considered rapid even today. In mid-1920 the American economy began to contract and the 1920-1921 depression lasted about a year, but a rapid recovery reestablished full-employment by 1923.

In the scramble to beat price increases during 1919 firms had built up large inventories of raw materials and purchased inputs and this temporary increase in demand led to even larger price increases.

With the depression firms began to draw down those inventories.