The source of hyperinflations is primarily
A)lower output growth.
B)continuing declines in velocity.
C)increases in money-supply growth.
D)continuing increases in money demand.

Question

Quizplus · Accepted Answer

Hyperinflations are primarily caused by increases in money-supply growth. When the central bank prints excess money without any corresponding increase in output or productivity, the value of money decreases, leading to a rise in inflation rates. This is often exacerbated by a loss of confidence in the currency, with people trying to spend their money as quickly as possible, further driving up prices. Factors such as declines in velocity or increases in money demand may contribute to hyperinflation but are not the primary sources.

The Source of Hyperinflations Is Primarily