Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: Money Growth And Intlation
Section: Chapter Questions
Problem 4QR
Related questions
Question
In what sense is inflation like a tax? How does thinking about inflation as a tax help explain hyperinflation?
Expert Solution
Step 1: Introduction
Inflation refers to the rate at which the general level of prices for goods and services in an economy is rising over a period of time.
Hyperinflation, on the other hand, refers to a situation where the inflation rate is very high and out of control, often resulting in the rapid devaluation of a currency. Hyperinflation can occur when a country's government begins printing money to pay off its debts, leading to a decrease in the value of the currency.
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