In an economy experiencing hyperinflation, we expect to observe
A) an increase in the demand for money and an increase in velocity.
B) an increase in the demand for money and a reduction in velocity.
C) a decrease in the demand for money and an increase in velocity.
D) a decrease in the demand for money and a reduction in velocity.

Question

Quizplus · Accepted Answer

In hyperinflation, people try to spend money quickly before it loses value, decreasing the demand for money and increasing the velocity of money.

In an Economy Experiencing Hyperinflation, We Expect to Observe