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Chapter 15: Q. b-For Critical Thinking (page 327)

Why do you suppose that people first stopped regularly asking Zimbabwean dollars as a store of value before deciding to halt their use as a medium of exchange?

Short Answer

Expert verified

Local shops showed less pricing in Zimbabwe dollars since they needed foreign currency to import foreign goods, therefore citizens began to use foreign currency in their regular transactions.

Step by step solution

01

Zimbabwean dollars.

Local shops listed less prices in Zimbabwe dollars because they needed foreign currency to import foreign items, hence citizens were increasingly using foreign currency in daily trades.

Despite the lack of a license, many companies and street vendors continued to do so.

02

Reason for Zimbabwean revalue their money.

Following the hyperinflation, the ZWDwas demonetized and replaced with a basket of regional currencies. The multiple currency system was decommissioned in 2019and replaced with a new currency, the RTGSdollar. The multiple currency system was reestablished in 2020.

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Most popular questions from this chapter

Consider Figure 15-7. Describe the basic shape that this figure would take if the Fed had instead generated multiple contractions in the money supply by removing 100,000$ in reserves from the banking system via an open market sale.

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