Hyperinflations are usually caused by large budget deficits financed by
A) selling bonds to private investors.
B) selling bonds to the central bank.
C) raising taxes.
D) borrowing from commercial banks.

Question

Quizplus · Accepted Answer

Hyperinflations are usually caused by an excessive increase in the money supply, which can be caused by the government financing their budget deficit through selling bonds to the central bank. This results in an increase in the money supply, which leads to inflation and further decreases the value of the currency.

Hyperinflations Are Usually Caused by Large Budget Deficits Financed by