Finance, Forex and Investments

Economics question - homework dilemma?

Say the Venezuelan economy is facing hyperinflation and the Venezuelan monetary authority prints money in order to buy goods and services for the government and make transfers to low income groups. Assume that you are CEO of Tata, Inc., an Indian multinational company that owns a telecommunications company in Venezuela. 1) What do you expect the results to be for the Indian economy? 2) What do you expect will happen to the nominal and real exchange rates? (Assume that India’s growth and inflation rates remain at 6% and 5%, respectively.) 3) What should you do with respect to pricing, cost management and whether to keep profits in Venezuela or repatriate them to India?

Public Comments

1. are talking about these things in India if that is what you are asking then the answer to all of them is get off the john and get out of venezuela. hyper-inflation is the death of an economy and printing more money is the fastest way to increase the inflation. You better get out sell all capital and move. Take your best employees with you, pay for them to move, they will likely by glad to go and get out before every piece of an asset you have is worthless