10

PRINCIPLES
OF
ECONOMICS

NAME: PHAM HONG AN

CLASS: IBC03
The principles of

HOW THE ECONOMY AS A

WHOLE WORKS?
Principle #9:

Prices rise when the government prints

too much money
 In the long run

WHILE

INCREASE UNCHANGE

Quantity: the amount or number of something, especially that can be

measured.
 RESULT

DECREASE INCREASE

Inflation: increases in the general level of prices.

 FACTS

The FASTER the Government

CREATES MONEY

The GREATER the INFLATION RATE

THIS IS EXACTLY WHAT HAVE BEEN HAPPENING IN VENEZUELA

MORE MONEY, MORE PROBLEMS

 VENEZUELA TRIED TO PASS LAWS TO KEEP A LOW PRICE ON THINGS
PEOPLE NEED MOST, LIKE FOOD AND MEDICINES. BUT THAT JUST MEANT
THAT THE SHOPS AND PHARMACIES RAN OUT OF THOSE THINGS.

Empty shelves in a Venezuelan supermarket

Principle #10:
Society faces a short-run tradeoff
between inflation and unemployment.
 In the SHORT run
( 1 – 2 YEARS )

PUSH IN OPPOSITE
DIRECTIONS

INCREASE DECREASE
 BECAUSE

THE
ECONOMY
DEVELOP

INCREASE INCREASE
 The tradeoff is always present.
Although other factors can make this tradeoff more or less
favorable.
 PRESIDENT OBAMA
REDUCE TAXES

INCREASE GOVERNMENT
SPENDING
Government spending: is the amount of money spent by the public sector on the
acquisition of goods and provision of services such as education, healthcare, social
protection and defense.
 THE NATION’S CENTRAL BANK
PRINT MORE MONEY

INCREASE THE SUPPLY OF

MONEY
Supply of money: is the total value of money available in an economy at a point of
time
 THIS IS STILL

A SUBJECT OF

CONTINUING DEBATE
THANK YOU

for

LISTENING