Cuba : economic issues

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INTRUDUCTION: In economics, the term currency can refer either to a particular currency, for example the BD, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of money deposited in banks, ownership of which can be transferred by means of cheques or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of exchange, but money need not necessarily be currency. Historically, money in the form of currency has predominated. Usually (gold or silver) coins of intrinsic value commensurate with the monetary unit (commodity money), have been the norm. By contrast,…show more content…
However as coca production began to increase in the latter half of the decade , GDP growth slowed and unemployment increases . It is estimate that the illegal drug sector employs 6.7 per cent of agricultural workers while the main legal crop , coffee employs 12 per cent . Although there may be short term wage gains for individual peasants , in the long run there are negative consequences since farmers have minimal incentives to work towards a modern competitive agricultural sector. Illegal drug trade has serious consequences for the Colombian economy , particularly in terms of the macro economy. Macroeconomics imbalances resulted from an overvalued peso and influx foreign exchange . the larg influx of foreign exchange resulted in phenomena known as 'Dutch Disease ' ( it is when the demand for an exported resources increase dramatically , resulting in an overvalued currency then other exports are made less competitive in the world market and foreign imports are more competitive domestically , this can cause a deindustrialization of the domestic economy) , and may have precipitated in the economic crisis of the late 1990's. 3- inflation rate and monetary policy : Even though Colombia was able to avoid the hyperinflation characterstics of argentina and brazil in the 1980s, persistent annual increases in the consumer price index of 20 to 25 percent had been evident since the mid 1970s. Higher coffee revenues in the 1970s caused rapid increase in the
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