Explain how brazil was able to reduce the rate of inflation, International Economics

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Q. Explain how Brazil was able to reduce the rate of inflation from 2,669 percent in 1994 to less than 10 percent in 1997?

Answer: By initiating a new currency and initially pegging it to the dollar. At the cost of extensive bank failures high interest rates in 1995 and the shift to a fixed upwardly crawling peg and a substantial real appreciation of the local currency.


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