Hyperinflation in Zimbabwe

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Hyperinflation in Zimbabwe: An Economic Crisis The Audience: As mentioned in a New York Time’s article, “Zimbabwe has been tormented this entire decade by both deep recession and high inflation, but in recent months the economy seems to have abandoned whatever moorings it had left” (Wines, 2006). This state of hyperinflation has caused the prices to soar to higher levels than ever making it harder for the citizens of the country to be able to consume necessary goods such as milk, bread, toilet paper. This report strives to aim towards the Zimbabwean government, taking a look at the way they have chosen to respond to this constantly increasing problem. The government will agree that this economic condition has been caused by their…show more content…
If money supply increases by a certain percentage while the real GDP stays the same, the amount of inflation caused is equal to the percentage that the money supply increased by. Therefore, excess printing of money by the government results to its devaluation, eventually causing prices to rise. Inflation in the country is a combined result of printing money which results to an increase in the money supply, but there being no goods and output to back it up with. In other words, these monetary decisions made by the government combined with a shortage in supply of goods have had a major impact on the people of Zimbabwe’s living conditions. The shortage has been caused by the implementation of price controls. The price controls provide less incentive for suppliers to supply the goods because cost of producing the goods are higher than the price set by the government, making the shortage worse and prolonging the inflation since the market prices are becoming higher and higher (“Hyper”, 2007). The inflation is at such high levels, that when someone gets money, the first thing they do is spend it on anything they can since they know the value of money will decrease rapidly (Gerson, 2008). The money an individual gets today will be roughly worth 5% less the next day. The fact that the country’s highest valued bill cannot buy a loaf of bread says a lot
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