Understanding Inflation and Economic Balances
Inflation
Moderate Inflation
Moderate inflation refers to a slow increase in prices. When prices are relatively stable, people trust the currency, placing their money in bank accounts. These accounts or checking deposits offer little return, which would allow their money to maintain its value.
Galloping Inflation
Galloping inflation describes runaway inflation when price increases reach double or triple digits, such as 30%, 120%, or 240%, in an average period of one year. When galloping inflation occurs, significant economic changes arise. In many cases, contracts can be linked to a price index or a foreign currency, such as the dollar. Money loses its value very quickly, so people try not to hold more than necessary, ensuring they have enough for essential living expenses.
Causes of Inflation
Different explanations exist for the causes of inflation. Various types of economic processes produce inflation, and there are diverse explanations for each. Each explanation accounts for a different inflation-generating process, although no single integrated theory encompasses all processes. Three inflation rates are:
- Demand-pull inflation: When general demand for goods increases without the productive sector having time to adapt the amount of goods produced to the existing demand.
- Cost-push inflation: Where the cost of labor or raw materials increases, and in an attempt to maintain profit rates, producers increase prices.
- Built-in inflation: Agents anticipate future price increases and adjust their current behavior to that future provision.
Inflation in Venezuela
Inflation in Venezuela reached 5.2% in April, double the figure obtained in March, and accumulating 11.3% in 2010, as reported by the country’s Central Bank (BCV). This represents the highest price increases in the region. The National Consumer Price Index (CPI) rose by 2.4% in March of this year and 1.8% in April 2009.
In the first four months of the year, accumulated Venezuelan inflation reached 11.3%, double that obtained in the same period of 2009, when it was 6.7%. In 2009, Venezuela recorded 25.1% inflation, the year with the highest fall in the country’s Gross Domestic Product (GDP) of 3.3%.
Balance of Payments
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ยง tourism and viajs, transxts, communications, construction, sgura, financial srvicios
d d balance payments balance
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d d imbalance payments balance
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fiscal deficit,
the fiscal deficit, d concpto dscrib the situation in which ls xl stado raliza2 costs or other public entidads in a dtrminado priode, normalmnt 1 year, above its ingrsos.
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dl mdida deficit,
dl deficit, the quantitative mdida prsupustario s ac d travs national accountsq gives the exact mdida d + q st.l critrio s national accounts is a contracted obligacions critrio d, d ls indpndient efctua2 payments and receipts.
xa imxtancia mdir its economy in 1st rcurr the ratio q s rprsntal sobrl deficit, gross product intrior the 1st round d q gives the imxtancia and trascndncia d st.
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