Which of the following is not an effect of hyperinflation?
A)Price differences among sellers of the same product become larger.
B)People hold on to currency only for very short periods of time.
C)People tend to exchange the currency that is subject to high inflation for a more stable currency.
D)More resources are used efficiently to overcome inflation's effects on transactions costs.
E)Inflation-induced activity that is rational for individuals often has a detrimental effect on the economy as a whole.

Question

Quizplus · Accepted Answer

Hyperinflation typically leads to a decrease in resource allocation and economic efficiency due to increased transaction costs and uncertainty, rather than an increase in efficiency as option D suggests. A, B, C, and E all describe common effects of hyperinflation.

Which of the Following Is Not an Effect of Hyperinflation