(a) "Hyperinflation in Venezuela is the currency instability in Venezuela that began in 2016 during the country's ongoing socioeconomic and political crisis. Venezuela began experiencing continuous and uninterrupted inflation in 1983, with double-digit annual inflation rates. Inflation rates became the highest in the world in 2014 under Nicolás Maduro, and continued to increase in the following years, with inflation exceeding 1,000,000% by 2018. Economist had highlighted some potential causes of the hyperinflation include heavy money-printing and deficit spending by Venezuela government and offcourse, the loss of massive government revenue due to weak oil price which 90% of its export rely on oil industry." (Alijazeera, 2019) (i) potential causes of "Economist had highlighted some the hyperinflation include heavy money-printing and deficit spending by Venezuela government..." Using appropriate diagrams, explain how fiscal deficit cause persistence inflation in Venezuela. (ii) Suggest any TWO (2) ways to ease the hyperinflation problem in Venezuela.

(a) "Hyperinflation in Venezuela is the currency instability in Venezuela that began in 2016 during the country's ongoing socioeconomic and political crisis. Venezuela began experiencing continuous and uninterrupted inflation in 1983, with double-digit annual inflation rates. Inflation rates became the highest in the world in 2014 under Nicolás Maduro, and continued to increase in the following years, with inflation exceeding 1,000,000% by 2018. Economist had highlighted some potential causes of the hyperinflation include heavy money-printing and deficit spending by Venezuela government and offcourse, the loss of massive government revenue due to weak oil price which 90% of its export rely on oil industry." (Alijazeera, 2019) (i) potential causes of "Economist had highlighted some the hyperinflation include heavy money-printing and deficit spending by Venezuela government..." Using appropriate diagrams, explain how fiscal deficit cause persistence inflation in Venezuela. (ii) Suggest any TWO (2) ways to ease the hyperinflation problem in Venezuela.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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