Question: The inflation rate in Argentina fell from over 3,000% in 1989 to 25% in 1992 and virtually zero in 1998.
(A) What do you think happened to the money supply growth over the same time?
(B) What do you think happened to the real growth rate over the same time?
(C) Explain how the Argentinean government was able to reduce inflation so quickly and keep it low.
(D) In mid-1999, the Argentinean unemployment rate was about 15%. Explain why that figure had many foreign investors worried that high inflation would soon reoccur in Argentina. (After all, according to the Phillips curve, high unemployment means low inflation.)