The Impact of Inflation on the Brazilian Economy
The government of Brazil is going to make a difficult effort to keep the economy rising. Since the true Brazilian appreciates the cost to the Brazilians of living every day. In addition, because of the increased commodity prices, it made it difficult for other nations to do business with Brazil (Kremer, Bick & Nautz, 2013). As a result of inflation, Brazil's increased prices of goods and services contribute to huge amounts of money on the market. The inter-business relations between Brazil and other nations worldwide may have a great impact to the Brazil through the revenues it generates from selling their abundant natural resources to other countries. Since the products are very expensive in Brazil, the Brazilians may end up selling them to fewer countries that have the financial capability of purchasing them thus, less revenue.
The Effects of Quotas, Tariffs, and Other Measures
Brazil might experience downsides by introducing quotas, tariffs and other measures to devalue their currency. A quota is a limit on some imported products. Tariffs, on the other hand, are the taxes to be charged on products and services being imported with the aim of improving the domestic market. Other measures may include; selling of securities to the general public by the central bank of Brazil. All these measures aim to lower the amount of money that is flowing in the market. A quota may have various disadvantages to both the country and the general public regarding revenue due to reduced exports and higher cost of living to the Brazilians. A tariff, on the other hand, raises the cost of doing business between Brazil and other countries which may lead to low-quality products. Finally, quotas and tariffs may lead to trade wars amongst countries globally.
Kremer, S., Bick, A., & Nautz, D. (2013). Inflation and growth: new evidence from a dynamic panel threshold analysis. Empirical Economics, 1-18.