Asked by Claudia Holton on Jun 01, 2024
Verified
To fund budget shortfalls, the government of Sineria, a country in South Asia, has started printing more money. Consequently, the supply of money has increased in the economy without corresponding increases in output quantity. This, in turn, has caused prices to rise as more money chases the same number of goods and services. This scenario most likely exemplifies _____.
A) commodification
B) privatization
C) deregulation
D) hyperinflation
Budget Shortfalls
A financial situation where projected spending exceeds the revenues or funds available, often leading to the necessity for cuts or borrowing.
Hyperinflation
An extremely high and typically out-of-control inflation rate, where the prices of goods and services rise rapidly, eroding currency value.
Printing More Money
The action taken by a country's central bank to increase the money supply, often leading to inflation if not managed properly.
- Conduct an analysis on the precipitants and ramifications of inflation and deflation.
- Acquire knowledge about the mechanisms and responsibilities of central banks in economic oversight.
Verified Answer
ZK
Zybrea KnightJun 03, 2024
Final Answer :
D
Explanation :
This scenario exemplifies hyperinflation, which occurs when there is a rapid and excessive increase in the amount of money in an economy, leading to a sharp rise in prices. This often happens when a government prints money to pay for its spending, without a corresponding increase in the supply of goods and services.
Learning Objectives
- Conduct an analysis on the precipitants and ramifications of inflation and deflation.
- Acquire knowledge about the mechanisms and responsibilities of central banks in economic oversight.