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To: Ilaine who wrote (78)	3/27/2001 2:25:57 PM
From: Thomas M.	Read Replies (1) \| Respond to of 443

Technology improved, but a greater reason for the improvement in gas mileage was the fact that smaller cars became more popular. This was simply a conscious effort to consume less gas. It could have happened in 1940. But, it only happened when the price of gasoline increased in the 1970s. Tom

To: Ilaine who wrote (78)	3/27/2001 10:34:32 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 443

Higher energy costs act like a tax, reducing consumers' discretionary incomes. So there's suddenly fewer dollars chasing all the consumer goods in the market- that's the deflation. In the '70s the Fed tried to paper over this deflation by expanding the money supply, sometimes as fast as 14% per year. Which succeeded only in raising the inflation rate dramatically, and giving rise to that remarkable beast, Stagflation. It's funny to remember that the inflation rate that had Nixon implementing wage and price controls and Ford handing out WIN buttons was the astounding rate of.... 4%. I can't even remember what the Carter rates got up to, only that it made sense to spend your money as fast as you could before it fell in value any further.