ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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people often adopt something other than the official currency to use as money
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people hoard the official currency
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the purchasing power of the currency increases rapidly
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the money supply is decreasing
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Detailed explanation-1: -This situation, will drive holders of the domestic currency to minimize their holdings and switch to more stable foreign currencies. In an attempt to avoid paying for higher prices tomorrow due to hyperinflation, individuals typically begin investing in durable goods such as equipment, machinery, jewelry, etc.
Detailed explanation-2: -Inflation can be controlled by a contractionary monetary policy is one common method of managing inflation. A contractionary policy aims to reduce the supply of money within an economy by lowering the prices of bonds and rising interest rates.
Detailed explanation-3: -Effects of Hyperinflation When prices rise excessively, money decreases in value because inflation causes it to have less purchasing power. Less purchasing power means consumers spend more to buy less. As a result, they have less money to pay bills and fewer dollars to use on essential items.
Detailed explanation-4: -Hyperinflation is a condition where the price of everything in a national economy goes out of control and increases very quickly.
Detailed explanation-5: -In a period of hyperinflation, those with savings can see a rapid fall in the real value of their savings. However, those who own physical assets tend to be protected. Physical wealth – such as land, factories and machines will retain its value.