In 1994, there was a month in which the inflation daily rate...

Text VII – questions 38 through 40

World Bank Brazil – country brief
1 With an estimated 167 million inhabitants, Brazil has the
largest population in Latin America and ranks sixth in the world. The
majority live in the south-central area, which includes industrial cities
4 such as São Paulo, Rio de Janeiro and Belo Horizonte. 80% of the
population now lives in urban areas. Rapid growth in the urban
population has aided economic development but also created serious
7 problems for major cities.
Brazil’s “miracle years” were in the late 1960s and early 1970s
when double digit-annual growth rates were recorded and the structure
10 of the economy underwent rapid change.
In the 1980s, however, Brazil’s economic performance was
poor in comparison with its potential. Annual Gross Domestic Product
13 (GDP) growth only averaged 1.5 percent over the period from 1980
to 1993. This reflected the economy’s inability to respond to
international events in the late 1970s and the 1980s: the second oil
16 shock; increase in international real interest rates; the Latin American
external debt crisis and the ensuing cutoff of foreign credit and foreign
direct investment. This lack of responsiveness reflected the largely
19 inward-looking policy orientation that had been in place since the
1960s.
Economic flexibility was further impaired by provisions of the
22 1988 Constitution, which introduced significant rigidities in budgeting
and public expenditure. An outcome of these pressures was a steady
rise in the rate of inflation, which reached monthly rates of 50% by the
25 middle of 1994.

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 With the help of text VII, judge the following items.