Which of the following is true of hyperinflation?
A)It causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency.
B)It is a situation in which people hoard currency expecting its value to increase in recent future.
C)It is a simultaneous increase in inflation and decrease in the quality of products.
D)It occurred in the United States in the 1970s.
E)It is a synonym for cost-push inflation.

Question

Quizplus · Accepted Answer

Hyperinflation causes the value of a currency to deteriorate so quickly that people become reluctant to hold that currency. This can result in a rapid increase in prices and a breakdown of the economy.

B is incorrect as hoarding of currency is not a cause but rather a consequence of hyperinflation.

C is incorrect as there is no direct correlation between inflation and the quality of products.

D is incorrect as hyperinflation did not occur in the United States in the 1970s.

E is incorrect as cost-push inflation refers specifically to a situation where rising input costs lead to increases in prices.

Which of the Following Is True of Hyperinflation