Question

1)By 2001, crisis conditions had revealed three very important underlying problems Argentina's economy EXCEPT: The Argentine...

1)By 2001, crisis conditions had revealed three very important underlying problems Argentina's economy EXCEPT:

The Argentine peso was overvalued.

The currency board regime had eliminated monetary policy alternatives for macroeconomic policy.

The printing of paper money without restrictions, resulting in hyperinflation.

The Argentina government budget deficit was out of control - government spending continued to increased but tax receipts did not.


Homework Answers

Answer #1

1998-2002 was a period of great economic depression for Argentina. This caused default on the foreign debt of the country, increase in the number of alternative currencies, it has put an end to the fixed exchange rate of Peso to the American dollars and many more.

2001, crisis conditions had revealed three very important underlying problems in Argentina's economy given in the options except:
The printing of paper money without restrictions, resulting in hyperinflation.

Hyperinflation refers to very high value of inflation (accelerating inflation), the price level of all the goods and services rise in this condition and the real value of the local currency gets eroded quickly.

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