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Hyperinflation in zimbabwe

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Hyperinflation in zimbabwe

  1. 1. Hyperinflationin ZimbabweGrade X
  2. 2. 2000-2007 hyperinflationinflation rates as great as 25,000 %• 2008 1 egg = ZW$50 billion (US32 ¢)Lottery would pay ZW$1.2 quadrillion (1.2 x 1015)
  3. 3. ReseRve bank ofzimbabwe• Can you become a rich person ?
  4. 4. Every Zimbabwean isbillionaire……..
  5. 5. 4 redenominations / price controls
  6. 6. 2000-2007• Agricultural production falls 51%• Industrial Production 47%• GDP falls 40%• Money Supply increases by more than 500B %(2008 estimate)• 94% unemployment• Election Fraud• Human Rights abuses• Redistribution of farmland
  7. 7. Now• Legalized foreign currency transactions2008/9– Zimbabwe has no currency; uses dollars,rands, other currencies.• Government of Unity (new power-sharingcoalition)
  8. 8. Bellringer 4/20/20091. How would you describe the economy ofUruguay from 1998-2004?05101520253035401998199920002001200220032004200520062007Uruguay GDP(in Billions)
  9. 9. 2005 ComparisonUruguays GDP: $30.66 billionSpain’s GDP: $1.83 trillionUnited States GDP: $12.36 trillionFactors: population, resources, education,crime
  10. 10. ZimbabwePopulation:13 millionGDP: 4.72 billionGDP/Capita:$402Unemployment:66%
  11. 11. the President of Zimbabwe on how to improve theeconomy of his country.Situation: Many blacks can not afford goods and food inthe markets. Business owners are allowed to chargewhatever price they want and since food is hard to find,its very expensive.Local Zimbabwe businesses have a difficult timecompeting with imports from the USA, South Africa andEngland. When Zimbabwe businesses fail, people losetheir jobs causing more unemployment.98% of the farm land is owned by white farmers, whichwas taken in the 1800’s from native Africans. 90% ofthis country is black and has no access to this farm land.The white farmers pay low wages and often do not hirenative blacks.
  12. 12. Zimbabwe 1990’sFixed pricesBannedimportsRedistributedlandPrinted upmore moneyGov’tsolution EFFECTPresident RobertMugabeShortagesMore shortagesStill moreshortagesinflationTechnically “hyperinflation”ProblemHigh foodpricesCompetition fromUSA & SABlacks haveno landNot enoughmoney
  13. 13. What if I told you?• Million dollars?• 25 Billion dollars?• 100 Billion dollars• Fiat currency = valueonly because we thinkit does
  14. 14. Inflation• Rise in pricesover time• “cost ofliving”• “The realvalue ofcurrency”
  15. 15. Why can’t we just print more money?• Quantity theory ofinflationPiles of currency in Zimbabwe
  16. 16. What else causes inflation?• Cost push theory- whenproducer costs increase,producers raise their prices.For example, increase the costof gasoline causes and increasein the price of food.• Demand pull theory –When consumers demandincreases producers willgenerally increase prices. Forexample: fads or hot xmas toys
  17. 17. Third World• Draw 3 comics showing each of thetheories behind inflation

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