Prior to December 15, 2016 the largest unit of currency in Venezuela was the 100 bolivar. With inflation running in excess of 500 percent a year, people needed stacks of 100-bolivar notes to buy everyday goods. To buy a pair of 40,000-bolivar jeans a consumer needed at least 400 of the 100-bolivar bills. To alleviate this situation, the Venezuelan government issued 20,000-bolivar notes in December 2016. How did the new notes alter real prices and incomes?

Prior to December 15, 2016 the largest unit of currency in Venezuela was the 100 bolivar. With inflation running in excess of 500 percent a year, people needed stacks of 100-bolivar notes to buy everyday goods. To buy a pair of 40,000-bolivar jeans a consumer needed at least 400 of the 100-bolivar bills. To alleviate this situation, the Venezuelan government issued 20,000-bolivar notes in December 2016. How did the new notes alter real prices and incomes?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 12SQ

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