Hyperinflation is caused by

Question

Quizplus · Accepted Answer

Hyperinflation occurs when the rate of growth in the money supply exceeds the rate of growth in real output. So, a high rate of growth in the money supply causes hyperinflation, making option B the correct choice. Choice A is incorrect because a constant increase in the money supply would not necessarily lead to hyperinflation unless it was at a high rate. Choice C and D are also incorrect because they suggest that hyperinflation is caused by the money supply growing more slowly than GDP, which is not the case. Finally, choice E is incorrect because large government surpluses would tend to reduce inflation rather than cause hyperinflation.

Hyperinflation Is Caused by