In 1984 and 1985, the small Latin Amencan country of Bolivia experienced hyper-inflation. Below are some key macroeconomic data from those years: a. Do the money supply, price level, and exchange rate against the U.S. dollar move broadly as you would expect? Explain. b. Calculate the percent changes in the general price level and price of the dollar between April 1984 and July 1985. How do these compare to each other and to the percent increase in the money supply? Can you explain the results? (Hint: Refer back to the discussion of the velocity of money in problem 3.)

 

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