Critical Thinking Problem #3: Under what circumstances would you see hyperinflation arising in the United States? What fiscal policies would lead in this direction?
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- What are the primary causes and potential socio-economic consequences of hyperinflation on a nation's economy?Examine the following expression and analyze it:Unforeseen high inflation redistributes society's income, diminishes the ability to make long-term plans, and forces individuals, government, and businesses to carefully assess the purchasing power of their assets.Which of the following are consequences of hyperinflation? Check all that apply. People cash their paychecks more quickly. Wages and prices spiral upward. People keep more currency on hand instead of spending it. Lending money generates a higher real return because nominal interest rates are higher.
- Analyze hyperinflation and stagflation.In a hyperinflationary economy, monetary items: a. Are not restated because they are already expressed in terms of the measuring unit current at year-end b. Are measured at fair value c. Are restated applying the general price index d. Are restated applying the specific price indexHow to deal with hyperinflation. Suggest some government policies.
- Please look up the definition of Hyperinflation and cite examples of 3 countries that have experienced it. What happened to the money of citizens in those countries? If the United States ever experienced a period of time in which the value of the US Dollar became worthless (hyperinflation), how could you safeguard your assets? What can you invest in today that would help you to survive during a period of economic uncertainty such as hyperinflation? What would you do if you were unable to get cash out of an ATM or use a credit card to pay for purchases?Which of the following does not describe hyperinflation?Select one:A) . During a hyperinflation people often try to shift to a "hard" currency issued by another country.B) Hyperinflation is often defined as an annual inflation rate higher than 100 percent.C) Germany, Hungary, Bolivia, Ukraine, Venezuela, and Zimbabwe have experienced hyperinflation in the last 100 years.D) . During a hyperinflation people tend to resort to barter to avoid dealing with rapidly inflating currency.E) The purchasing power of money increases dramatically during hyperinflation.Consider Snackistan, a hypothetical country that produces only burritos. In 2017, a burrito is priced at $4.00. NOTE: the options for the drop down question is this: The impact of the government's decision to raise revenue by printing money is known as the (fisher effect OR velocity of money OR classical dichotomy OR inflation tax)
- Discuss what hyperinflation is. What does hyperinflation do to an economy and society? In other words, how does it change the way people live their lives and transact business? Is hyperinflation something we want for the U.S. economy? Discuss in 4 to 5 complete and well-written sentences?Suppose a country has a money demand function (M/P)d=kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. What is the average inflation rate?Discuss what caused hyperinflation in Zimbabwe and if you think this could happen in The United States.
