future entry into the European Economic Community (EEC). With the eventual fall of international prices, primarily oil, money and the dollar, the international economy in general, and the economies of the industrialized countries and of Spain in particular, the country entered a favorable state of expanding growth. On January 1, 1986, Spain finally ascended to the EEC.From 1986-1990, the Spanish economy received an unprecedented financial growth after joining the EEC. This economic expansion generated a great deal of employment, due to a greater demand for labor relating to increased production and the increasingly flexible measures in the labor market. Unemployment decreased 4.2%, and this economic growth became Europe’s most rapid through these five years, and the public deficit decreased along with the rate of inflation. The gross formation of capital increased to an annual average rate of 14.1%, which doubled the average growth of investment in the OECD countries during this period. From 1985-1989, the gross formation of capital grew from 19% to 26% of the GDP. However, Spain’s economy became so fired up that its domestic demand increased to an annual rate of almost three points above production. Their inability to keep up with the demand consequently led to another ride back to high inflation rates. This surplus in demand over national production created a rise in domestic prices and an growth in foreign purchases. Because of the supply and demand policies, (also known as overheating ) subsequently, certain measures have been taken. Such measures include the reducing of the growth of demand and increasing the possible expansion of the economy. Since then, and in all regard to need, monetary and fiscal policy has been provided. To complement these policies of restrictive demand and more flexible supply, the government has tried to stimulate an income policy on several occasions.This has especially come into effe...
