While hyperinflations are always caused by rapid growth in the money supply, they can be intensified by the actions of households and firms trying to protect themselves from inflation by spending money as soon as they receive it.
a. During a hyperinflation, the velocity of money is likely to:
b. Use the quantity equation to show how the change in velocity affects the inflation rate
c. Holding the growth rate of real GDP constant, this change in velocity must inflation
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While hyperinflations are always caused by rapid growth in the money supply, they can be intensified...
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