10. 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
11. Now
• Legalized foreign currency transactions
2008/9
– Zimbabwe has no currency; uses dollars,
rands, other currencies.
• Government of Unity (new power-sharing
coalition)
12.
13. Bellringer 4/20/2009
1. How would you describe the economy of
Uruguay from 1998-2004?
0
5
10
15
20
25
30
35
40
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Uruguay GDP
(in Billions)
16. 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.
17. Zimbabwe 1990’s
Fixed prices
Banned
imports
Redistributed
land
Printed up
more money
Gov’t
solution EFFECT
President Robert
Mugabe
Shortages
More shortages
Still more
shortages
inflation
Technically “hyperinflation”
Problem
High food
prices
Competition from
USA & SA
Blacks have
no land
Not enough
money
18. What if I told you?
• Million dollars?
• 25 Billion dollars?
• 100 Billion dollars
• Fiat currency = value
only because we think
it does
19. Inflation
• Rise in prices
over time
• “cost of
living”
• “The real
value of
currency”
20. Why can’t we just print more money?
• Quantity theory of
inflation
Piles of currency in Zimbabwe
21. 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
22. Third World
• Draw 3 comics showing each of the
theories behind inflation
Editor's Notes
4 redenominations, money supply grows by 700 billion % in 2008
Checks had to be written for twice the amount because by the time they could be cashed, they would be the correct amount.
