In virtually all hyperinflations, rapid money growth begins to occur because of:
A) large and/or growing budget deficits.
B) union demands for higher wages.
C) a war.
D) the introduction of wage indexation in labour contracts.
E) a change of government.

Question

Quizplus · Accepted Answer

In virtually all hyperinflations, rapid money growth begins to occur because of large and/or growing budget deficits. This is because governments typically increase spending to an unsustainable level, leading to a higher demand for money and therefore inflation.

In Virtually All Hyperinflations, Rapid Money Growth Begins to Occur