- In 1984 and 1985, the small Latin American country of Bolivia experienced hyperinflation. Below are some key macroeconomic data from those years:
Macroeconomic Data for Bolivia, April 1984 – October 1985
| Month | Money Supply | Price Level (Relative to | Exchange Rate (Pesos per |
| (Billions of Pesos) | 1982 Average = 1) | Dolar) | |
| 1984 | |||
| April | 270 | 21.1 | 3,576 |
| May | 330 | 31.1 | 3,512 |
| June | 440 | 32.3 | 3,342 |
| July | 599 | 34.0 | 3,570 |
| August | 718 | 39.1 | 7,038 |
| September | 889 | 53.7 | 13,685 |
| October | 1,194 | 85.5 | 15,205 |
| November | 1,495 | 112.4 | 18,469 |
| December | 3,296 | 180.9 | 24,515 |
| 1985 | |||
| January | 4,630 | 305.3 | 73,016 |
| February | 6,455 | 863.3 | 141,101 |
| March | 9,089 | 1,078.6 | 128,137 |
| April | 12,885 | 1,205.7 | 167,428 |
| May | 21,309 | 1,635.7 | 272,375 |
| June | 27,778 | 2,919.1 | 481,756 |
| July | 47,341 | 4,854.6 | 885,476 |
| August | 74,306 | 8,081.0 | 1,182,300 |
| September | 103,272 | 12,647.6 | 1,087,440 |
| October | 132,550 | 12,411.8 | 1,120,210 |
- Do the Money supply, price level, and Exchange rate against the U.S dollar move broadly as you would expect? Explain.
- Calculate the percent changes in the general price level and price of the dollar betwwen April 1984 and July 1985. How do these compare to each other and to the percent increase in the Money supply? Can you explain the results?
