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Inflation is the persistent increase in the general price level of goods and services over time and the loss of the value of a currency.. When the general price level rises, a unit of cu

BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ - TÀI CHÍNH

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BÀI TIỂU LUẬN CHUYÊN ĐỀ LẠM PHÁT

 Sinh viên thực hiện :

+ Nguyễn Lâm Mỹ Vy

+ Phạm Thị Ánh Dương

+ Lê Minh Anh

+ Nguyễn Thành Công

Nhóm : 3

 Lớp : B03E

Giáo viên hướng dẫn : Đặng Văn Dân

5/2021

PHẦN 1 : LÝ THUYẾT

1 WHAT IS INFLATION?

Inflation is the persistent increase in the general price level of goods and services over time and the loss of the value of a currency When the general price level rises, a unit of currency buys fewer goods and services than in the past, so inflation reflects a decrease in purchasing power per unit of currency

Inflation has 3 levels:

• Natural inflation: 0 – less than 10%

• Hyperinflation: 10% to less than 1000%

• Hyperinflation: over 1000%

2 CAUSES OF INFLATION

DEMAND-PULL INFLATION

When the market demand for a certain item increases, the price of that item will increase accordingly The prices of other commodities also escalated

accordingly, leading to an increase in the prices of most commodities in the

market Inflation caused by an increase in demand (consumption demand of the market increases) is called "demand-pull inflation"

In Vietnam, the increase in gasoline prices leads to an increase in taxi fares, an increase in the price of pork, an increase in the price of agricultural products is a typical example

COST-PUSH INFLATION

Costs pushed by enterprises include wages, input material prices, machinery, taxes, etc When the prices of one or more of these factors increase, the total

production costs of enterprises also increase Therefore, the cost of products will also increase in order to preserve profits An increase in the general price level of the economy as a whole is called “cost-push inflation”

STRUCTURAL INFLATION

With an efficient business, enterprises gradually increase the "nominal" wages for employees But there are also groups of inefficient business lines,

businesses also follow that trend and are forced to increase wages for employees But because these businesses are inefficient, so when they have to increase wages for workers, these businesses are forced to increase product prices to ensure profits and generate inflation

INFLATION DUE TO CHANGES IN DEMAND

When the market decreases the demand for a certain product, while the quantity demanded for another product increases If the market has a monopoly supplier and the price is rigid below (it can only increase but cannot decrease, like electricity in Vietnam), then the item for which the quantity demanded decreases will still not decrease in price On the other hand, the commodity with an increase

in quantity demanded increases in price As a result, the general price level rises, leading to inflation

EXPORT-LED INFLATION

When exports increase, leading to an increase in aggregate demand that is higher than total supply (the market consumes more goods than it provides), then products are collected for export, causing the quantity supplied to the domestic market to decrease (to attract goods) domestic supply) causes total domestic supply to be lower than aggregate demand When aggregate supply and aggregate demand are out of balance, inflation will aris

IMPORT INFLATION

When the price of imported goods increases (due to an increase in import taxes or due to an increase in world prices), the selling price of that product in the country will have to increase When the general price level is inflated by import prices, inflation will result

CURRENCY INFLATION

When the supply of money circulating in the country increases, for example, because the central bank buys foreign currency to keep the domestic currency from depreciating against the foreign currency; or because the central bank buys bonds

at the request of the state, causing the amount of money in circulation to increase, which is also the cause of inflation

PHẦN 2 : THỰC TRẠNG

Zimbabwe

Zimbabwe hyperinflation refers to a period of hyperinflation in Zimbabwe from 2007 to 2009, finishing in 2009 When the monthly inflation rate

surpasses 50%, hyperinflation occurs Zimbabwe began the hyperinflationary period in March 2007

- Inflation only disappeared in 2009, when the African country abandoned its currency Zimbabwe's inflation problem is by far the second worst in history, after only the 1946 Hungarian hyperinflationary crisis, with prices doubling every 15.6 hours The most visible expression is the Central Bank's continual issue of exceptionally high-denomination banknotes, beginning in January 2008 with banknotes having a face value of 20 million USD and continuing until July 21, 2008, with

banknotes with a face value of 100 billion USD

Statistics Office, inflation has risen from an annual rate of 32% in 1998 to an official estimate of 11,200,000,000% in August 2008 The country was

in a situation of hyperinflation, so the central bank issued a new $100 billion currency

- The most expensive bill ($100 trillion) Unofficial statistics from

November 2008 placed Zimbabwe's annual inflation rate at 516 times

10 to the power of 18 percent, with prices doubling every 1.3 days By

2005, the typical Zimbabwean's purchasing power had plummeted to a

real level equal to 1953 Locals must mainly import necessities from neighboring Botswana, South Africa, and Zambia

- Zimbabwe issued a $100 trillion (1014) currency in January 2009 Acting Finance Minister Patrick Chinamasa said on January 29 that Zimbabweans will be permitted to swap other, more stable currencies (e.g., Sterling, Euro, South African Rand, and US Dollar) in addition to the Zimbabwean Dollar in order to fight the country's inflation

- The Reserve Bank of Zimbabwe (RBZ) stated on February 2, 2009, that

12 additional zeros will be removed from the currency, with

1,000,000,000,000 (third generation) Zimbabwe dollars being

exchanged for one new dollar

- New banknotes (fourth generation) with new values of Z$1, Z$5, Z$10, Z$20, Z$50, Z$100, and Z$500 are released The fourth generation coins circulated alongside the third generation coins, which were still in use as of June 30, 2009

- Since February 2009, Zimbabwe's new government has developed a multi-currency trade system, with the US dollar being the most

commonly available The currency used in the 2009 national budget allocation and the 2010 financial plans is US dollars

THE REASON WHY?

- The government constantly produces money to suit its requirements, eroding the value of the Zimbabwean currency and driving up the prices of imported products Zimbabwe, after post-war Hungary, became the world's second worst hyperinflationary country in 2008 Every 25 hours, prices double

- The development of the interbank exchange market resulted in a quick widening of the disparity between the official market and the "black market" exchange rate, leading prices to rise by 300 percent A loaf of bread jumped

in price from $1.8 to $3.50, and a box of butter climbed in price from $8.5 to

$17

CONSEQUENCE:

- Eighty percent of workers are out of work The country's and other countries' good health and education systems have failed The increasing shortages of essential necessities, as well as the political and economic uncertainties surrounding the next national elections Zimbabwe's economy is reported to have totally collapsed As a result, the virtual

currency Bitcoin is being used as a form of payment with caution

Germany

Germany fell into the most severe inflation in October 1923 when the inflation rate reached 29.50% At the time of December 1923, people had to spend 4.2 trillion marks (papiermarks) in exchange for 1 USD

During the 1920s, the Germans had to resort to firewood and coal to replace the mark, which had lost its value miserably due to inflation At that time, using money to burn was even cheaper than firewood and coal

The reason why?

At first, it was thought that the cause of this hyperinflation was the fact that the German government printed too much money to spend on war But the real cause was revealed a few years later It was the German government that decided to borrow to pay for the war In 1919, prices almost doubled and Germany lost the war The post-war reparations stipulated in the Treaty of Versailles required

Germany to pay in gold or the corresponding foreign currency instead of marks

To buy this foreign currency, the German government had to use papiermarks backed by government debt and thus accelerated the devaluation of the currency

Consequence:

To make matters worse, Germany was unable to pay its debts and French and Belgian armies occupied the Ruhr valley in January 1923 to demand payment in kind from Germany This incident quickly pushed the German economy into hyperinflation

Solution:

The German government created a special central bank and issued a new currency, the rentenmark, at an exchange rate of 4.2 rentenmark/USD and with 12 zeros on the papiermark The rentenmark has helped stabilize the German economy quite effectively

Inflation escalates in Venezuela.

Venezuela is expected to issue a bill with the highest denomination of 1 million bolivars next week However, when the embargoed country was facing hyperinflation, the note was only worth about 50 cents

Venezuela's economy is in free fall

Hyperinflation, power cuts, shortages of food and medicine have forced millions of Venezuelans to leave the country

But the man many say is responsible for the country's impoverishment, Nicolás Maduro, is preparing to take the oath of office to hold the presidency for another six years

What is happening in Venezuela?

It can be said that the biggest problem that Venezuelans are facing in their daily lives is hyperinflation That means the cost of everything from food to bills has skyrocketed, while the currency continues to depreciate

According to a study by the National Assembly, now controlled by the opposition, Venezuela's annual inflation rate hit a staggering 1,300,000% in the 12 months to November 2018

By the end of 2018, prices were doubling every 19 days

So what does that mean?

According to the Miami Herald, a portion of a burger - a traditional Christmas treat

- cost more than a month's minimum wage in December 2018

This leaves many Venezuelans struggling, struggling to pay for very basic activities such as food and toiletries

Why does this situation happen?

On paper, Venezuela should be a rich country because it has the largest oil reserves

in the world

But its heavy reliance on oil - which accounts for about 95% of the country's export earnings - made the country unsafe when oil prices plummeted in 2014 That means Venezuela faces a shortage of foreign currency, making it difficult to import goods in the same volume and level as before Imported goods are

becoming increasingly scarce

As a result, companies have to raise prices, and inflation rises

Add to that the government's willingness to print more money and steadily raise the minimum wage to win support from the poor in Venezuela, even though the money they receive is rapidly depreciating

The government has also increasingly struggled to maintain its financial credibility after it failed to pay off some of its mature government bonds

With creditors finding it difficult to take the risk to invest in Venezuela, the

government is printing more money, which further devalues the currency, and further increases inflation

What did the government do?

The government decided to launch a new currency, called the "sovereign bolivar", which removed the five zeros behind the "strong bolivar", and related the new currency to the petro, a cryptocurrency (cryptocurrency) since August 2018

The government also started circulating eight new banknotes, in denominations of

2, 5, 10, 20, 50, 100, 200 and 500 sovereign bolivars, along with two new coins Besides, there are a number of new measures, including: increasing the minimum wage to 34 times compared to before; restrict generous fuel subsidies for those without "motherland identity" and increase VAT from 4% to 16%

How effective?

The new currency has continued to depreciate since its launch, and the minimum wage has continued to rise Furthermore, the International Monetary Fund (IMF) predicts that inflation could rise to 10,000,000% (ten million percent) by the end of 2019

Who do people blame?

Most of the anger is directed at the Socialist government, which has been in power since 1999, first under the late Hugo Chávez, and now Nicolás Maduro

Mr Chávez ran at a time of great inequality in Venezuela; New policies are

introduced to help the poor change the situation

Among these are things like price controls, a policy introduced by President

Chávez that aims to make basic goods more affordable for the poor Prices are controlled for flour, cooking oil and toiletries, and that leaves a handful of

Venezuelan companies that specialize in the production of these items unprofitable Critics also say that the policy of foreign currency controls introduced by President Chávez in 2003 has made the black market trade in dollars bustling

Others blame Venezuela's problems on the country's hostile opposition and

"imperialist forces" such as the US and neighboring Colombia

They say US sanctions make it difficult for the country to restructure its debts Often they benefit from government social programs, and say that despite their poverty, they have a better life than they did before Chávez came to power, 1999

It is also thanks to this loyal force that President Marudo got enough votes in the

2018 election

However, it should be noted that the opposition boycotted the election, and many other groups were banned from running

What is happening to the people of Venezuela?

About 3 million people, or about 10% of the population, have decided to leave since the crisis began in earnest in 2014, according to United Nations figures The mass exodus is one of the largest forced departures in the Western

Hemisphere Among those who departed in January was a Supreme Court justice and former Maduro loyalist, Mr Christian Zerpa He said he was leaving to protest the president's return to a second term However, Vice President Delcy Rodríguez said those numbers were inaccurate, and said they were inflated by "enemy

nations." rebellious", in order to find an excuse for military intervention

Most people flee to neighboring Colombia, and from there on to Ecuador, Peru and Chile Others took the southerly route to Brazil

More than 200,000 Venezuelans have traveled to Spain Many of them are

descendants of Spaniards who traveled to Venezuela in the 1950s and 1960s

However, only a very small fraction were granted asylum by Spain - just 15 of the 12,875 cases in 2017