The main reason that hyperinflation renders a currency worthless is that ________.
A)the government cannot print money fast enough to keep up with the rising prices
B)laws against raising prices are easily evaded
C)reducing government expenditures is politically unpopular
D)the government's "official" inflation rate is always a gross understatement
E)as soon as inflation seems out of control,everyone knows that the currency will soon lose whatever value it has today

Question

Quizplus · Accepted Answer

Hyperinflation creates a cycle where people lose confidence in the currency, so they try to exchange it quickly for goods, causing prices to rise even further. This creates a self-reinforcing loop where everyone knows the currency will soon lose its value, making it effectively worthless. The government may try to print more money to keep up with rising prices, but this only exacerbates the problem by worsening inflation. Therefore, option E is the best choice.

The Main Reason That Hyperinflation Renders a Currency Worthless Is