Hyperinflation
Inflation has always affected many different economies across the world. With inflation there is a “sustained increase in the aggregate price level.” This means that there is an increase in the price of general goods and services which leads to people being able to buy fewer goods with their money. Inflation is not always bad, as it can be managed by the economy itself or by the help of the government. However, if hyperinflation, very high inflation, is occurring then the economy of that country is in a very difficult state. A hyperinflation period was present mostly in the twentieth century in countries such as Yugoslavia, Germany, and Zimbabwe. These rough periods were mostly caused by times of war and rash decision making by government officials. During the twentieth century there were many political changes happening across the world. From the effects left on Germany from World War I, to the breaking up of Yugoslavia in the early 1990s and to the gloomy period in the Zimbabwe economy in the late 1990s, all of these events left …show more content…
will enter a hyperinflation period in the near future. This is a very unlikely scenario since there have been decades of studying done on inflation and hyperinflation by American economists. The U.S. economy prevents itself from entering a hyperinflation phase through its active Federal Reserve System and the knowledge that was gained from observing other countries go into hyperinflation. Many believe that the gradual rise in inflation will cause the economy to eventually enter a hyperinflation phase. Despite this, the economy needs a moderate increase in inflation because that increase is the sign that the economy is actively growing. Equally important is the fact that if the inflation rate gets too low, then the economy would be in a deflation state which will also cause the economy to suffer
Inflation has always affected many different economies across the world. With inflation there is a “sustained increase in the aggregate price level.” This means that there is an increase in the price of general goods and services which leads to people being able to buy fewer goods with their money. Inflation is not always bad, as it can be managed by the economy itself or by the help of the government. However, if hyperinflation, very high inflation, is occurring then the economy of that country is in a very difficult state. A hyperinflation period was present mostly in the twentieth century in countries such as Yugoslavia, Germany, and Zimbabwe. These rough periods were mostly caused by times of war and rash decision making by government officials. During the twentieth century there were many political changes happening across the world. From the effects left on Germany from World War I, to the breaking up of Yugoslavia in the early 1990s and to the gloomy period in the Zimbabwe economy in the late 1990s, all of these events left …show more content…
will enter a hyperinflation period in the near future. This is a very unlikely scenario since there have been decades of studying done on inflation and hyperinflation by American economists. The U.S. economy prevents itself from entering a hyperinflation phase through its active Federal Reserve System and the knowledge that was gained from observing other countries go into hyperinflation. Many believe that the gradual rise in inflation will cause the economy to eventually enter a hyperinflation phase. Despite this, the economy needs a moderate increase in inflation because that increase is the sign that the economy is actively growing. Equally important is the fact that if the inflation rate gets too low, then the economy would be in a deflation state which will also cause the economy to suffer