Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 28, Problem 9SPPA
To determine
To explain:
The definition of hyperinflation and whether the economy of Venezuela is facing hyperinflation.
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What is disinflation? What are the two leading causes of inflation? Where online do you find inflation rate data?
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Chapter 28 Solutions
Foundations of Economics (8th Edition)
Ch. 28 - Prob. 1SPPACh. 28 - Prob. 2SPPACh. 28 - Prob. 3SPPACh. 28 - Prob. 4SPPACh. 28 - Prob. 5SPPACh. 28 - Prob. 6SPPACh. 28 - Prob. 7SPPACh. 28 - Prob. 8SPPACh. 28 - Prob. 9SPPACh. 28 - Prob. 10SPPA
Ch. 28 - Prob. 11SPPACh. 28 - Prob. 1IAPACh. 28 - Prob. 2IAPACh. 28 - Prob. 3IAPACh. 28 - Prob. 4IAPACh. 28 - Prob. 5IAPACh. 28 - Prob. 6IAPACh. 28 - Prob. 7IAPACh. 28 - Prob. 8IAPACh. 28 - Prob. 9IAPACh. 28 - Prob. 10IAPACh. 28 - Prob. 11IAPACh. 28 - Prob. 12IAPACh. 28 - Prob. 1MCQCh. 28 - Prob. 2MCQCh. 28 - Prob. 3MCQCh. 28 - Prob. 4MCQCh. 28 - Prob. 5MCQCh. 28 - Prob. 6MCQCh. 28 - Prob. 7MCQCh. 28 - Prob. 8MCQ
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- Discuss what caused hyperinflation in Zimbabwe and if you think this could happen in The United States.arrow_forwardIn what sense is inflation like a tax? How does thinking about inflation as a tax help explain hyperinflation?arrow_forwardIn the FT article “Japan’s core inflation hits 41-year high with central bank under policy pressure” (20 January 2023), we can read: “Japan's core inflation rate rose to a new 41-year high of 4 per cent in December [...]. Official statistics released on Friday showed core inflation, which excludes volatile food prices but includes oil, reached its fastest pace since December 1981, exceeding the Bank of Japan’s 2 per cent inflation target for the ninth consecutive month. The release came two days after Japan’s central bank defied market pressure and maintained its ultra-loose monetary policy, arguing that wage growth was not strong enough to sustainably achieve its inflation target. Uniqlo owner Fast Retailing and other large companies have in recent weeks announced plans to dramatically raise wages, fuelling hopes that rising prices could finally drive salaries higher in a country that has wrestled with three decades of price stagnation.” (a) Using a 3-equation model, represent…arrow_forward
- Inflation, Disinflation, and Deflation – End of Chapter Problem Country Inflation in 2019 Money supply in 2019 (billions) Central government receipts in 2019 (billions) India 7.66% Rp36,883 Rp12,828 United States 1.81% $3,981 $3,331 Data from: Bureau of Economic Analysis; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank. The inflation tax is often used as a significant source of revenue in developing countries, where tax collection and reporting systems are not well-developed, and tax evasion may be high. a. Use the numbers in the accompanying table to calculate the inflation taxes in the United States and India (Rp = rupees). Enter your answers in billions of dollars or rupees, and round all answers to the nearest tenth. U.S. inflation tax: $ billion Indian inflation tax: Rp billion b. How large is the inflation tax for each country when calculated as a percentage of government receipts? United States: % India: %arrow_forwardWhich of the following does not describe hyperinflation?Select one:A) . During a hyperinflation people often try to shift to a "hard" currency issued by another country.B) Hyperinflation is often defined as an annual inflation rate higher than 100 percent.C) Germany, Hungary, Bolivia, Ukraine, Venezuela, and Zimbabwe have experienced hyperinflation in the last 100 years.D) . During a hyperinflation people tend to resort to barter to avoid dealing with rapidly inflating currency.E) The purchasing power of money increases dramatically during hyperinflation.arrow_forward3b. Suppose a country has a money demand function (M/P)d kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. What is the average inflation rate?arrow_forward
- Assess the impact of money supply changes on inflation with diagramarrow_forwardWhat are the primary causes and potential socio-economic consequences of hyperinflation on a nation's economy?arrow_forwardMost central banks, like the Bank of England, set targets for their economy's inflation rate. The Bank of England has an inflation target of 3.5% per year. According to the Quantity Theory of Money, by how much must the Bank of England grow the money stock in order to hit its inflation target? The Bank of England must decrease the money stock by 3.5% per year. The Bank of England must increase the money stock by 3.5% per year. The Bank of England must decrease the money stock by 3.5% per month. The Bank of England must increase the money stock by 3.5% per month.arrow_forward
- If the money supply (M) is $300, the real GDP (Q) is 200, the velocity of money (V) is 6, the interest rates is 5% and the inflation rate is 3%, then calculate nominal GDP.arrow_forwardHyperinflation is extremely rare in countries where the Central Bank is independent of the rest of the government. Why is that?arrow_forwardWhich of the following are consequences of hyperinflation? Check all that apply. People cash their paychecks more quickly. Wages and prices spiral upward. People keep more currency on hand instead of spending it. Lending money generates a higher real return because nominal interest rates are higher.arrow_forward
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