Question

When government intervention makes currency worthless, this condition is called

Answer 1

Option (B) is correct. When government intervention makes currency worthless, this condition is called hyperinflation.

Further Explanation:

Hyperinflation:

Hyperinflation is a condition in the economy when the price of the goods rises very quickly. The price of the product rises unusually, which would lead to a drastic change in a few days only. The condition of the hyperinflation occurs when the government of a country starts to print the money for the repayment of its loan and spending. As the supply of money increases, the value of the currency decreases. The currency’s purchasing power will decrease. It will result in the huge price rise of commodities. The inflation occurs due to two factors:

1. The increase in the money supply.
2. Demand-pull inflation.

In demand-pull inflation, the demand for the products exceeds the supply of the product. It will lead to an increase in the price of the goods. In order to straighten the money supply, the government prints more notes. With the huge amount of currency in the economy, the price of the product increases very fast.  

Government intervention to make the currency worthless:

When the government makes the currency worthless, the condition is known as hyperinflation because the government tries to strengthen the money supply to beat inflation. However, it drastically increases the price of the product.

Thus, option (B) is correct. When government intervention makes currency worthless, this condition is called hyperinflation.

Learn More:

1. Learn more about the product leadership brainly.com/question/6610513
2. Learn more about the demand and supply brainly.com/question/5471118
3. Learn more about the demand brainly.com/question/11093180

Answer Details:

Grade: Senior school

Chapter: Inflation

Subject: Economics

Keywords: government, intervention,makes, currency, worthless, condition, deflation,  

hyperinflation, cost-push inflation, demand-pull inflation.

Answer 2

In economics, hyperinflation occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of local money. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.