Evidence from episodes of hyperinflation indicates that
A)wage-push demands have been the ultimate source of inflationary monetary policies.
B)supply shocks have been the ultimate source of inflationary monetary policies.
C)huge government budget deficits have been the ultimate source of inflationary monetary policies.
D)there is no common source of inflationary monetary policies.

Question

Quizplus · Accepted Answer

Episodes of hyperinflation have shown that huge government budget deficits are the ultimate source of inflationary monetary policies. Governments often resort to printing more money to finance their deficit spending, which increases the money supply and decreases the value of the currency, leading to hyperinflation. Supply shocks and wage-push demands may also contribute to inflation, but they are not the primary source of hyperinflation.

Evidence from Episodes of Hyperinflation Indicates That