During most episodes of hyperinflation:
A) the inflation rate first increases, and then remains constant.
B) the inflation rate increases over time, but then rapidly decreases on its own.
C) the inflation rate decreases over time.
D) the inflation rate is high but constant.
E) the inflation rate increases over time.

Question

Quizplus · Accepted Answer

During most episodes of hyperinflation, the inflation rate increases over time, leading to rapid devaluation of the currency. This is usually caused by an increase in the money supply without a corresponding increase in the supply of goods and services. Governments often resort to hyperinflation when they are unable to finance their expenditures through taxation or borrowing, and instead they print money to pay for their expenses. This can lead to a vicious cycle where inflation begets more inflation, as people try to spend their money as quickly as possible and businesses raise prices to keep pace with rising costs. Eventually, this can lead to the collapse of the currency and severe economic hardship for the population.

During Most Episodes of Hyperinflation