Essay: Hyperinflation

Hyperinflation Sample Essay

Hyperinflation in economics is used to refer to a condition whereby there is inflation that is out of control. Under this condition, the prices of goods increase rapidly while at the same time, the currency of the country loses value in comparison to other currencies. Formally it is used to refer to a situation where the rate of inflation goes beyond 50% on a monthly basis. Zimbabwe has been experiencing hyperinflation for quite some time now.

Another difference between hyperinflation and normal inflation is that while normal inflation is usually recorded on a yearly basis, hyperinflation is usually recorded on a monthly basis.

In economics, the term is sometimes used to refer to an inflationary cycle that has no tendency to move towards equilibrium. As a phenomenon, hyperinflation is characterized by the debasement of coinage and unchecked increase in money supply and it is closely associated with political and social upheavals, wars, and economic depressions.

Hyperinflation is usually a threat to economic growth and development. As a result of this different economists and economies as well suggest different correctionary measures.

Both classical economists and monetarists agree to the fact that hyperinflation is usually a result of irresponsible borrowing by government authorities.

Hyperinflation is usually corrected by introducing drastic measures like imposing shock therapy slashing government expenditure, and altering currency basis.

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