Question

A country experiences hyperinflation when :

Answer 1

The country has been suffering for inflation. The value of currency goes down and the prices of goods go up.

Answer 2

Economists believe that hyperinflations are caused by large persistent government deficits financed primarily by money creation (rather than by borrowing or by increasing taxation) As such, hyperinflation is often associated with some stress to the government budget, such as wars or their aftermath, sociopolitical upheavals, a collapse in export prices, or other crises that make it difficult for the government to collect tax revenue. A sharp decrease in real tax revenue coupled with a strong need to maintain government spending, together with an inability or unwillingness to borrow, can lead a country into hyperinflation.

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