The Economy of Brazil Essay

3540 Words Mar 28th, 2013 15 Pages
Table of Contents
Introduction 3
Gross Domestic Product (PPP) 4
Inflation 5
Unemployment Rate 6
Correlation of Inflation and Unemployment 7
Correlation of Unemployment and Gross Domestic Product 7
Correlation of Inflation and Gross Domestic Product 7
Conclusion 8
Appendix 1 8
Appendix 2 9
Appendix 4 10
Appendix 5 10
Appendix 6 11

Introduction
Brazil is a country of fast growth and development over the years, it is the sixth country with the highest nominal GDP which considered the leading economy in Latin American and the second largest in the western hemisphere. There are several economic events that trace the changes in the history of Brazil’s economy. Brazil was colonized by Portuguese in the 16th century when they
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However, there was no capital flight and the Central Bank was also able to reduce interest rates.
Inflation
To clearly understand Brazil’s economic situation understanding what inflation is crucial to decide weather is it good or bad for the economy. Inflation is a rise in the general level of prices of goods and services in an economy. When this happenes it will mean that each unit of the currency will be able to buys fewer goods or services. In other word, inflation also reflects a loss of real value also known as an erosion in the purchasing power of money (Index Mundi, 2012). Inflation rate measures the rate of the rise or fall in prices or the value of the currency that consumers pays for goods and services. There are two types of inflation, one is cost-push inflation and another is demand-pull inflation. While the Cost-push inflation happens when there is an increase in the factors of production which means that organization will also rise the price of the product, the demand-pull inflation is when there is a high rate of demand at the same time there are scarce supply so organization will push the price up in order to try to gain more profit.
In just 30 years, the combined inflation in Brazil reached 1,000,000,000,000,000% (1 trillion) from 1964 to 1994. The main reason for the high inflation in Brazil was because of the recurrently weak macroeconomic fundamentals in Brazil. Another Primary result of the high inflation was also because

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