Principles of Economics- Mankiw (5th) 623

Principles of Economics- Mankiw (5th) 623 - CHAPTER 28 M O...

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CHAPTER 28 MONEY GROWTH AND INFLATION 643 resources. If the monetary authority pursued a low-inflation policy, Mr. Miranda would be happy to hold pesos, and he could put his time and effort to more productive use. In fact, shortly after this article was written, the Bolivian inflation rate was reduced substantially with more restrictive monetary policy. W HENEVER GOVERNMENTS TURN TO THE printing press to finance substantial amounts of spending, the result is hy- perinflation. As residents of Serbia learned in the early 1990s, life under such circumstances is far from easy. Special, Today Only: 6 Million Dinars for a Snickers Bar B Y R OGER T HUROW B ELGRADE , Y UGOSLAVIA —At the Luna boutique, a Snickers bar costs 6 million dinars. Or at least it does until manager Tihomir Nikolic reads the overnight fax from his boss. “Raise prices 99 percent,” the doc- ument tersely orders. It would be an even 100 percent except that the com- puters at the boutique, which would be
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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