Hyperinflation in
Zimbabwe
Grade X
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)
Reserve bank of zimbabwe
•Can you become a rich person ?
Every Zimbabwean is billionaire……..
4 redenominations / price controls
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
Now
• Legalized foreign currency transactions 2008/9– Zimbabwe has no currency; uses
dollars, rands, other currencies.
• Government of Unity (new power-sharing coalition)
Bellringer 4/20/20091. How would you describe the
economy of Uruguay from 1998-2004?
0
5
10
15
20
25
30
35
40
Uruguay GDP(in Billions)
2005 Comparison
Uruguay's GDP: $30.66 billion
Spain’s GDP: $1.83 trillion
United States GDP: $12.36 trillion
Factors: population, resources, education, crime
Zimbabwe
Population:13 million
GDP: 4.72 billionGDP/Capita:$402Unemployment:
66%
the President of Zimbabwe on how to improve the economy of his country.
Situation: Many blacks can not afford goods and food in the markets. Business owners are
allowed to charge whatever price they want and since food is hard to find, its very expensive.
Local Zimbabwe businesses have a difficult time competing with imports from the USA, South
Africa and England. When Zimbabwe businesses fail, people lose their jobs causing more
unemployment.
98% of the farm land is owned by white farmers, which was taken in the 1800’s from native
Africans. 90% of this country is black and has no access to this farm land. The white farmers pay low wages and often do not hire native blacks.
Zimbabwe 1990’s
Fixed prices
Banned imports
Redistributed land
Printed up more money
Gov’tsolution EFFECT
President Robert Mugabe
Shortages
More shortages
Still more shortages
inflation
Technically “hyperinflation”
ProblemHigh food
pricesCompetition from
USA & SA
Blacks have no land
Not enough money
What if I told you?
• Million dollars?• 25 Billion dollars?• 100 Billion dollars
• Fiat currency = value only because we think it does
Inflation• Rise in
prices over time
• “cost of living”
• “The real value of currency”
Why can’t we just print more money?
• Quantity theory of inflation
Piles of currency in Zimbabwe
What else causes inflation?
• Cost push theory- when producer costs increase, producers raise their prices. For example, increase the cost of gasoline causes and increase in the price of food.
• Demand pull theory – When consumers demand
increases producers will generally increase prices. For example: fads or hot xmas toys
Third World• Draw 3 comics showing each of the theories
behind inflation
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