In high inflation countries, inflation rates can exceed the rate of growth of money because:

Question

Quizplus · Accepted Answer

All of the given options are correct. High inflation leads to an increase in the velocity of money, as people spend money quickly to avoid losing its value. High rates of inflation also increase the opportunity cost of holding money, leading people to spend and invest it rather than holding onto it. As inflation increases, money rapidly loses value, further incentivizing people to spend it as quickly as possible. This can lead to inflation rates exceeding the rate of growth of money in the economy.

In High Inflation Countries, Inflation Rates Can Exceed the Rate