Accurate economic analysis

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Reference no: EM132141960

During Jimmy Carter's presidency, increases in the Consumer Price Index (CPI) reached double digits. In order to combat this problem, the Carter administration launched a Wage-Price Guidelines program in which businesses could not increase prices or wages above a certain percentage or the company would be prohibited from doing business with the federal government. A company also could find itself on the prohibited list if it earned profits higher than a percentage recommended by the government. The Carter administrated argued that higher profits are responsible for higher prices so that if a company made lower profits, its prices would be lower, too.

Did the Carter administration engage in accurate economic analysis and was its prohibition on "high" profits justified? Why or why not?

Reference no: EM132141960

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