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Hyperinflation is the term used to describe an economy that experiences an abrupt and excessive rise in the general level of prices for goods and services. A breakdown in the economy's regular operation might result from it, which is often defined by monthly inflation rates that reach 50%.
Many causes, such as an excessive increase in the money supply, a decline in the value of the currency, and political unrest, contribute to hyperinflation. The value of the currency decreases and prices increase when the supply of money in an economy expands more quickly than the output of goods and services. People expect higher wages to keep up with growing prices, which feeds a vicious cycle where businesses pass on the increased expenses to customers, who then demand even higher prices.
An economy can suffer greatly from hyperinflation, which can cause a steep decrease in real incomes, pervasive poverty, and social instability. It can also result in a breakdown in the regular operation of the financial markets, making it harder for people to save money and invest and for businesses to get funding.
In order to prevent hyperinflation, governments, and central banks often take a number of measures, such as enacting sensible fiscal and monetary policies, controlling the expansion of the money supply, and preserving the stability of the financial system. But once it starts, hyperinflation can be hard to stop without major economic and political changes.
