What is hyperinflation and how does it affect the economy?

What is hyperinflation and how does it affect the economy?

Hyperinflation is an extremely high and typically accelerating inflation rate, often exceeding 50% per month. It erodes the real value of the local currency, leading to a loss of confidence in the currency and the economy.

Can you give me an example of a country that experienced hyperinflation?

Yes, Zimbabwe in the late 2000s is a notable example. At its peak, inflation reached an astronomical 89.7 sextillion percent per month!

What are the main causes of hyperinflation?

Hyperinflation is usually caused by excessive money supply, often due to government printing money to cover deficits, loss of confidence in the currency, or external shocks.

How can a country recover from hyperinflation?

Recovery often involves stabilizing the currency, implementing fiscal reforms, and restoring public confidence through measures like dollarization or introducing a new currency.

What are the social impacts of hyperinflation?

Socially, hyperinflation can lead to increased poverty, social unrest, and a decline in living standards as people struggle to afford basic necessities.