In 1980, one Zimbabwean dollar was worth 1.47 U.S. dollars. By the end of 2008, the exchange rate was one U.S. dollar to 2 billion Zimbabwean dollars. When an economy experiences rapid increases in the price level such as what occurred in Zimbabwe, the economy is said to experience?

Hyperinflation occurs, according to economist Phillip D. Cagan, who developed the most widely accepted mathematical model of hyperinflation to this day, when the general price level in a economy increases by 50% in a single month.

The cause of hyperinflation is clear: an excessive growth of the money supply that is not accompanied by a smiliar growth in the output of the economy. The most common reason for this is governments printing money to meet spending demands.

This is exactly what happened in Zimbabwe: the government of former ruler Robert Mugabe was broke, and Mugabe resorted to printing money to pay for debts, for the military, among other things.

In​ 1980, one Zimbabwean dollar was worth 1.47 U.S. dollars. By the end of​ 2008, the exchange rate was one U.S. dollar to 2 billion Zimbabwean dollars. When an economy experiences rapid increases in the price level such as what occurred in​ Zimbabwe, the economy is said to experience?

Respuesta :

Otras preguntas

In 1980, one Zimbabwean dollar was worth 1.47 U.S. dollars. By the end of 2008, the exchange rate was one U.S. dollar to 2 billion Zimbabwean dollars. When an economy experiences rapid increases in the price level such as what occurred in Zimbabwe, the economy is said to experience?