To reduce, and ultimately stabilize at lower levels, the rate of price inflation is rapidly becoming the main economic objective of all industrialized countries. For policy makers inflation is currently a problem as serious as was the problem of unemployment during the inter-war years. Yet, governments' attempts to control inflation have not on the whole been successful. This relative failure may well be attributed to a wrong diagnosis of the nature of the problem, leading to the application of inappropriate cures. Economists have advanced a variety of diagnoses of the causes of inflation which have provided the bases for various policy prescriptions. Essentially, however, there are two schools of thought.