ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Hyperinflation is a term used when inflation rates exceed 50%. This is typically caused by rapid growth of the supply of paper money. The best studied example is post-WWI Germany, where the Weimar Republic was faced with having to pay reparations from the war, as well as stimulating economic growth.

Detailed explanation-2: -Hyperinflation occurs when prices have risen by more than 50% per month. Daily increases might approach 200% or more when hyperinflation occurs.

Detailed explanation-3: -Hyperinflation is a condition where the price of everything in a national economy goes out of control and increases very quickly.

Detailed explanation-4: -The two primary causes of hyperinflation are (1) an increase in money supply not supported by economic growth, which increases inflation, and (2) a demand-pull inflation, in which demand outstrips supply. These two causes are clearly linked since both overload the demand side of the supply/demand equation.

Detailed explanation-5: -If hyperinflation continues, people hoard perishable goods, like bread and milk. These daily supplies become scarce, and more expensive, and the economy falls apart. People lose their savings as cash loses its value. For that reason, the elderly are often the most vulnerable to hyperinflation.