(a)[2]
Use a production possibility curve diagram to show what is expected to happen to the Venezuelan economy from 2014 to 2017.
(b)[2]
Explain what the change in the price of oil in 2015 and the resulting fall in Venezuela’s earnings from oil exports suggest about the price elasticity of demand for Venezuelan oil.
(c)[4]
Explain why price controls have resulted in shortages of basic foodstuffs in the shops in Venezuela. Use a demand and supply diagram to support your answer.
(d)[6]
With reference to the data, analyse how both demand-pull and cost-push pressures could account for the change in the rate of inflation shown in Table 1.1.
(e)[6]
Discuss whether the estimated rate of inflation in Venezuela will allow the bolivar to continue performing all of its functions as money.