Hyperinflation is a situation where prices in an economy rise rapidly and out of control. In this article, we will explore the causes, effects, and preventive measures of hyperinflation.
Causes of Hyperinflation:
Excessive money supply
Decline in the economy's productive capacity
Foreign exchange crisis
Government budget deficit
War or political instability
Effects of Hyperinflation:
Reduced purchasing power of the currency
Drastic reduction in savings
Decrease in foreign investments
Increased poverty
Economic stagnation and recession
Preventive Measures of Hyperinflation:
Increase in interest rates
Fiscal discipline
Controlling money supply
Stabilizing the exchange rate
Increasing foreign investments
Hyperinflation can cause severe damage to an economy, and it is essential to understand its causes and effects. Preventive measures such as fiscal discipline, controlling money supply, and stabilizing the exchange rate can help prevent hyperinflation.
