Running header: MACROECONOMIC DISCUSSIONS
Inflation is the worst nightmare a country's economy can find itself in. Inflation is
characterized by a continuous increase in the prices of products over a long period. All over the
world, different countries have, at one time, found themselves under inflation. Among the worsthit countries is Venezuela. The current Venezuela economy is considered to be in tatters, and the
South American country has been hit by a political crisis. According to records from the Central
Bank of Venezuela, in the third quarter of the year 2018, the GDP contracted a historical 22.5%
over the previous year. A more worrying revelation is that there was a reduction of Venezuela's
economy by approximately half within a period of five years from 2013 to 2018. For a long time
now, the inflation rate in Venezuela has been out of control. According to new data, this rate hit
130,060% in the year 2018. Venezuela has been decimated by runaway inflation. The
population's despair has been deepened by the fact that wages and money have become worth
less and less.
For many years, the British pound has been dominant in terms of value against the dollar.
However, the pound has been depreciating in value against the dollar. According to an article by
Ben Chapman, the recent coronavirus outbreak has made the pound to fall to its lowest level
against the dollar in the past 35 years (Chapman, 2020). Many factors affect the exchange rate
between the US dollar and the pound. The first factor is the economic growth rates of the USA
and the UK. Generally, if the GDP of one country grows at a faster rate than the other country,
its currency becomes stronger. Today, the US economy is growing at a faster rate than in the UK.
This has been made possible by many factors, among them being a cut in taxes. This offers
businesses and consumers more money to spend. Political stability is the other factor affecting
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