Which of the following is common to all hyperinflations?
A) High trade deficits.
B) High budget deficits.
C) Liquidity traps.
D) Credible monetary policy.
E) Disinflation.

Question

Quizplus · Accepted Answer

High budget deficits are a common feature of hyperinflations as governments often resort to printing money to finance their spending. This leads to an increase in the money supply, which in turn reduces the value of the currency and causes hyperinflation. High trade deficits, liquidity traps, credible monetary policy, and disinflation are not necessarily common to all hyperinflations.

Which of the Following Is Common to All Hyperinflations