this is david schoumacher for economics usa.annenberg/cpb project captioning performed by the national captioning institute, inc. captions copyright 1986 educational film center

i'm david schoumacher.ou can see the forces that control a farmer's economic wellbeing at work here at this farmers' market. taken together, it demonstrates a concept that economists call "perfect competition." in other words, every farmer who raises, say, tomatoes, is in competition with every other farmer who raises tomatoes. the market determines the price through the interplay of supply and demand. so the farmer is a "price taker," not a "price maker," and he tries to produce at the lowest possible cost and produce as much as he can as long as he can turn a profit. at the beginning of the 20th century, the farmers felt secure in their calling as they toiled to supply all the foods a growing nation demanded. so why, just 20 years later, were so many farmers forced to leave the land? their problems began with the entry of the united states into world war i. president woodrow wilson challenged the nation's farmers to dramacally increase food production. "food will win the war," he told them. announcer: whe

i'm david schoumacher. rarely have americans had to worry about water.y take it for granted because it's plentiful available, and cheap. but for what water does, there is no substitute. what would it take to show how much water is really worth? 1975 marked the beginning of one of california's worst droughts. it's a semiarid state with a gigantic agricultural industry, dependent on water from its snow pack and winter rains. but in the fall and winter of 1975 winter rains and snow did not come. accustomed to dry spells californians showed little concern. but that winter wore on with no rain or snow and soon, what was great weather for some began causing problems for others. the summer of '76 exploded into flame as over 1,400 fires swept the state in a three-week period. marin resident sharon mooney recalls. when the rains didn't come and didn't come, people talked about preferring to have rain to sunshine. the next winter continued without rain. farmers were notified that water for irrigation would be drastically cut back. by march of 1977 the reservoir le

i'm david schoumacher. many years after the great depression national economic policy's basic goal was minimizing unemployment. but the winter of 1982 saw 12 million unemployed. many complained they were victims of a needlessly cruel government policy. public enemy number one was inflation, and jobless workers were the war casualties. the battle cast new doubt on the government's ability to manage the economy or the wisdom of even trying. why was stopping inflation so hard? the time has come for decisive action to break the vicious circle of spiraling prices and costs. inflation is domestic enemy number one. present high inflation threatens the economic security of our nation. from richard nixon through jimmy carter president after president set out to fight inflation. when that threatened to increase unemployment president after president reversed course, opting for stimulative policies to keep the economy growing and unemployment low. we must shift our emphasis from inflation to recession. the economy gre

i'm david schoumacher.t of us have been taught that to spend more money than we earn is to court financial disaster but the federal government seems to play by a different set of rules. almost every year the country runs a deficit. yet we're told that deficit is necessary, even beneficial. but deficits piled one on top of another create a growing national debt. and the interest payments on that debt add more dollars to the next year's deficit. during a five-yearpan back in the 1940s, our national debt more than quadrupled as we fought world war ii. how did we pay for that war? and why didn't it bankrupt us? early in the morning of september 1, 1939, german armies marched into poland, and the world exploded into war. by 1940, the germans controlled europe and re poised to attack britai a frightened american congress appropriated $37 billion for defense, more than the entire cost of world war i. how would the government raise these huge sums? that means taxes and bonds and bonds and taxes. schoumacher: treasu

for economics usa, i'm david schoumacher.ect captioning performed by the national captioning institute, inc. captions copyright 1986 educational film center annenberg media ♪ for information about this and other annenberg media programs call 1-800-learner and visit us at www.learner.org. annenberg media ♪ annenberg media ♪ in 1974, california water was cheap. by 1977, the state was in the midst of a great drought. what would californians pay now for water? after the 1973 arab-israeli war, the middle-eastern oil spigot was shut off. what did america do to get domestic oil producers to fill the gap?

i'm david schoumacher. federal reserve board is responsible for deciding how much money the economy needs to grow. in the early 1970s, the fed held to a policy of using the money supply to try to keep the economy on course. in times of inflation, the fed tightened the money supply to squeeze excess dollars out of the economy. in times of recession, it increased the money supply to stimulate growth. but in 1975, the fed, under the chairmanship of arthur burns, faced a new and troubling dilemma -- caught between persistent inflation and a growing recession, how did chairman burns keep the economy on course? by late 1974, inflation had become a serious economic problem. under pressure from rising fuel prices, inflation rose to a staggering 12%. inflated interest rates had driven up the price of mortgages and brought the building industry to a standstill. sales of new cars and home appliances plunged. in september, president gerald ford asked congress to join him in a battle against inflation. my first priority