Question

Hyperinflation can occur when

Answer 1

Option D is correct.

Hyperinflation can occur when the government prints more money and pushes prices up.

Further explanation:

Hyperinflation:

Hyperinflation is a situation where the economy faces the problem of a shortage of supply of products and excessive money in the market.  

Justification for the correct and incorrect answer:

A.

Consumers show an interest in purchasing more goods: This option is incorrect.

Hyperinflation occurs when there is more money supply in the economy.The supply of products tends to get decrease and demand rises. Consumers do not show interest in purchasing more goods as prices of goods get high.

B.  

Producers need more money to make and distribute goods: This option is incorrect.

In the hyperinflation situation, the supply of money in the economy is high but there is a shortage of supply of goods. So producers do not need money to make and distribute goods. The prices of the products get so high, that people are not able to purchase any product.

C.

Companies raise prices to pass on costs to consumers: This option is incorrect.

Hyperinflation does not occur when the companies raise prices to pass on costs to consumers. Prices of the goods get high due to huge demand. In order to balance the situation. The government raises the prices of the products.  

D.  

The government prints more money and pushes prices up: This option is correct.

Hyperinflation occurs when the government prints more money and pushes prices up. This will create a situation of hyperinflation where prices of the goods rises and with money supply too.

Thus, hyperinflation can occur when the government prints more money and pushes prices up.

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Answer details:

Grade: High School

Subject: Economics

Chapter: Inflation

Keywords:Hyperinflation can occur whenconsumers show an interest in purchasing more goods, producers need more money to make and distribute goods, companies raise prices to pass on costs to consumers, the government prints more money and pushes prices up.

Answer 2

Hyperinflation can occur when the government prints more money and pushes prices up.

If there are excessive and uncontrolled price increases in any economy, such economy will face situation called Hyperinflation.

in other words, any economy where the prices of goods and services have risen more than 50 percent a month over a certain period of time will experience hyperinflation.

Further Explanation

Hyperinflation can occur if there is excess money in circulation. It commonly occurs when an economy is facing serious depression

Depression can be described as a period of a prolonged contracting economy. Any country facing a period of prolonged contracting economy will experience a negative growth rate.A good example of a negative growth rate is Recession.

Depression can last for many years and always result in the following:

• High unemployment rate
• Less lending
• A decrease in productive output
• Company liquidating
• Personal bankruptcies

Effects of hyperinflation

Hyperinflation will result in the devaluation of a country currency in the foreign exchange market and this will make the people minimize the holdings of the local currency and switching to more stable foreign currencies.

However, hyperinflation at some point occurred in some countries' economies.

Some of these countries include

• Argentina
• Hungary
• Germany
• Russia
• China

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KEYWORDS:

• hyperinflation
• economy
• currency
• foreign
• exchange