According to the quantity equation,the cure for hyperinflation is:
A)higher taxes.
B)reducing government spending.
C)reducing money growth.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The quantity equation is MV=PY, where M is the money supply, V is its velocity, P is the price level, and Y is real output. Hyperinflation occurs when there is a disproportionate increase in the money supply (M) relative to the growth in real output (Y). To cure hyperinflation, the money growth rate (M) needs to be reduced to bring it in line with the growth rate of real output (Y). Options A and B may also help to reduce inflationary pressures, but they do not directly address the root cause of hyperinflation as effectively as reducing money growth (C). Therefore, reducing money growth (C) is the best choice to cure hyperinflation.

According to the Quantity Equation,the Cure for Hyperinflation Is