Inflation And Hyperinflation

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Hyperinflation is a situation where inflation is out of control and is growing extremely rapid, which happens when monthly inflation exceeds 50 percent for more than 30 days. It often occurs when there is a significant increase of money supply, but is not supported by the gross domestic product (GDP) growth. Hence, it leads to an imbalance in the supply and demand for money and changes to aggregate price levels. Hyperinflation is considered to be a macroeconomic event that leads to a lower value of a country’s currency which leads to a loss of confidence from its citizens. Even if hyperinflation is considered an atypical event, it occurred as many as 55 times in the 20th century in countries such as China, Germany, Venezuela, Zimbabwe, and Russia, etc. (Investopedia, n.d.). In addition, hyperinflation often starts when the government of a country starts to conduct expansionary monetary policy that affects the valuation of its currency. It is when the government begins to print more money to pay for spending when the economy is at or exceeding the potential long run output point. Venezuela and Zimbabwe countries that falls under hyperinflationary due to the government mismanagement of their currency; therefore, it is important to see how Venezuela’s current monetary policy and Zimbabwe’s monetary policy contribute to both of the nation’s hyperinflation.

Venezuela: Venezuela is a country located in the northern coast of South America, which is currently still suffering

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