Question

Argentina's economic performance in the late 1990s while their peso was pegged to the U.S. dollar can be characterized as ________ rates of inflation and ________ rates of unemployment.

high; high

low; low

low; high

high; low

Answer 1

During the 1990's Argentina was performing very well financially. Its economic policies where under a close scrutiny by the IMF. Under, the convertibility plan , the IMF pegged the Pesos against the Dollar. While , much of the 1990's Argentina experienced low inflation and high growth. In fell into deep recession during the 1998, due to the inability of the country to use it's foreign policies .

So, the performance in the late 1990/2 due to their currency being pegged and their inability to use the macro -economic policies freely can be characterised by High rates of inflation and high rates of unemployment.

Slowly, the investors began to losing confidence in this economy.

The correct option is option a.