The Venezuelan economy is currently experiencing very high levels of inflation.
According to the Wall Street Journal in the article "Venezuelan Inflation Surges" :
"The annual inflation rate in June registered at 39.6%, the highest 12-month figure since the central bank introduced a new methodology for its Consumer Price Index in 2008.
According to a monthly central-bank report, the nationwide index jumped 4.7% in June from the previous month. Last month’s figure was an improvement over the 6.1% climb seen in May, but still ranked among the highest monthly increases dating back to 2008."
The full article can be found here: http://online.wsj.com/article/SB10001424127887324507404578596153737072578.html#articleTabs%3Darticle
Your textbook discussed how inflation can impose costs on the economy. Venezuela has unfortunately reached levels of inflation often termed as hyperinflation. The inflation rate they experienced in June is equal to or greater than the inflation rate that many countries will experience all year.
Please describe some of the costs of this level of inflation, the costs of hyperinflation. How will such high levels of inflation affect people in Venezuela? The informal economy (the black market) in Venezuela has become a vital part of the Venezuela economy. How might something like high levels of inflation help cause the informal economy to become more important?
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