The hyperinflation experienced by interwar Germany illustrates how fiscal policy can be connected to monetary policy when government expenditures are financed by:

Question

Quizplus · Accepted Answer

When government expenditures are financed by printing large quantities of money, it leads to an increase in the money supply, which reduces the value of the currency and leads to hyperinflation. This is what happened in interwar Germany, where the government tried to finance its war efforts by printing money, which led to hyperinflation and a collapse of the economy.

The Hyperinflation Experienced by Interwar Germany Illustrates How Fiscal Policy