In 1974 the two major problems that had faced the industrially developed countries were an unprecedented rise in prices and a serious deterioration in the external payments position, both legacies of the quadrupling of oil prices at the end of the previous year. Most governments, therefore, were forced to adopt monetary and fiscal policies aimed at curbing inflation, and by early 1975 the external payments position had improved somewhat in most Western industrialized countries. These anti-inflationary policies, however, depressed the level of business activity.
The economic crisis of 1974 ____.
had a serious and lasting impact on unemployment
grew even more serious in 1975 in all the Western industrialized countries
was confined to underdeveloped countries
was a direct result of the sudden sharp increase in late 1973 of oil prices
contributed to an increase in monetary transactions
In most countries, efforts made in 1974 to curb inflation ____.
led to an improvement in the situation within a year
increased unemployment and caused political instability
caused an even greater deficit in external payments
failed totally due to the even increasing oil prices
received the full supports of industrialists
The author argues that inflation in 1974 ____.
was mishandled by a majority of governments
also showed itself clearly in the growing deficit in the balance of payments
hit developed countries more than underdeveloped countries