1. Inflation: a) What is seigniorage? b) Why was seigniorage widely used in Latin America during the 1980s and early 1990s? c) According to monetarists, what are the main reasons for high inflation rates in Latin America during the 1980s and early 1990s? Provide Formula used by Monetarists to describe the relationship between money supply and prices. d) What is Central Bank independence? How can it help control inflation in Latin America according to monetarists? Why? 2. According to Patrice Franko, The Puzzle of Latin American Development, chapter 5 pp. 120-128 a) What was Brazil's inflation rate in December 1986 b) What policies did Brazil undertake in the Cruzado Plan to control inflation? c) Did the Cruzado Plan succeed in the short run? Did it succeed in the long run? Why? d) What Policies were included in the Bresser Plan? e) Was the Bresser Plan successful in the short run? Was it successful in the long run? Why? f) What policy changes were implemented in the Real Plan? g) Was the Real Plan successful in the short run? Was it successful in the long run? Why? 3. Taxation in Latin America A) After Import Substitution failed, what new tax revenue source did Latin American countries use? B) Is the new taxing method efficient? Is it progressive? Why? C) Why do most governments that tax consumption, choose to tax gas, alcohol and tobacco? Explain and show a graph. C) What is the Olivera-Tanzi Effect? Why is it a problem in Latin America? 4. Privatization in Latin America A) Why was there a large wave of privatizations in Latin America in the 1990s? B) What is the relationship between privatization and FDI in Latin America? C) Why is there opposition to privatization within Latin America? E) According to Chong and Lopez-de-Silanes, what happened to the sales growth, output and employment of firms that were privatized in Latin America? 5. a) Draw the Environmental Kuznets Curve. b) Are Latin American countries in the upward or downward sloping part of the Environmental Kuznets Curve? Explain