Venezuela's Monetary Policy
There are many articles talking about how the government wish worried about inflation. The International Monteary Fund, in particular, is concerned about inflation. In a report, it is stated that the "concerns are particularly serious regarding Venezuela, where policies are not tight enough and inflation is still high." They forecast that inflation will increase to 31.6% in 2013. In another article it describes that Venezuelan government is trying to reduce public spending by issuing $2.8 billion in treasury notes and bonds.
Effect from the policy
This policy is a contractionary policy. The effect that will occur from this policy will be that it will slow down spending and the economy, and raise interest rates.
Aggregate demand and aggregate supply chart
Since this policy is contractionary, it will make less money available and have it difficult to spend. This will cause the aggregate demand curve to fall from AD1 to AD2.
There are many articles talking about how the government wish worried about inflation. The International Monteary Fund, in particular, is concerned about inflation. In a report, it is stated that the "concerns are particularly serious regarding Venezuela, where policies are not tight enough and inflation is still high." They forecast that inflation will increase to 31.6% in 2013. In another article it describes that Venezuelan government is trying to reduce public spending by issuing $2.8 billion in treasury notes and bonds.
Effect from the policy
This policy is a contractionary policy. The effect that will occur from this policy will be that it will slow down spending and the economy, and raise interest rates.
Aggregate demand and aggregate supply chart
Since this policy is contractionary, it will make less money available and have it difficult to spend. This will cause the aggregate demand curve to fall from AD1 to AD2.