Question

what is a major effect of hyperinflation on a country’s money and its economy?
(1 point)

it leads to a much stronger international exchange rate.
it causes citizens to increase their personal savings.
it forces the prices of goods and services to fall.
it makes the nation’s currency become nearly worthless.

Explanation:

Hyperinflation is extremely high and typically accelerating inflation. When hyperinflation occurs, the supply of money grows much faster than the production of goods and services. This causes the purchasing power of the currency to plummet rapidly. As a result, the nation’s currency becomes nearly worthless because it can buy very little in terms of goods and services.

• Option A is incorrect because hyperinflation weakens, not strengthens, the international exchange rate of a currency.
• Option B is incorrect as hyperinflation usually leads to people spending money quickly rather than saving, as the value of money is decreasing rapidly.
• Option C is incorrect because hyperinflation causes prices of goods and services to rise, not fall.

Answer:

D. It makes the nation’s currency become nearly worthless.