Rationing in Nicaragua direct hit. Trade and investment plummeted, unemployment soared to 25 percent, and inflation reached more than 36,000 percent by 1988. From 1980 to 1990, Nicaragua’s average real per capita income fell 35 percent, and the incidence of poverty rose to 44 percent. Rationing in Nicaragua In 1984, the FSLN announced rationing for 20 basic goods, including rice, sugar, milk, and toilet paper. At this time, the FSLN were fighting an expensive war against the Contra guerrillas who were funded by the Reagan Administration. The FSLN tried to stabilize the economy by focusing more on the production of export crops and
Credit rationing mechanism of monetary policy. Drawing on the famous Oxford surveys of businessmen in the 1930s he argued that it was likely that changes in the interest rate did not have a substantial effect on investment decisions. Harrod went on to argue that the main channel through which interest rates curtailed economic activity was through the process of what is now known as credit rationing. He wrote that: "It is essentially the imperfection of the capital market that makes monetary policy a powerful weapon." Credit rationing Credit rationing is the limiting by lenders of the supply of additional credit to borrowers