According to the BBC, inflation in the country of Zimbabwe reached an annualized

Question

According to the BBC, inflation in the country of Zimbabwe reached an annualized rate of 231,000,000 percent in October of 2008. Prices got so high that in January of 2009, the country's central banklong dash—the Reserve Bank of Zimbabwelong dash— introduced a $100 trillion bill. Use the following link to read the summary of Zimbabwe's experience with hyperinflation in Wikipedia: http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe).

1. What was the root cause of hyperinflation in Zimbabwe?

A. The government confiscated private farms from white landowners.

B. The central bank abandoned the Zimbabwean dollar.

C. Zimbabwe adopted the IMF's Economic Structural Adjustment Programme.

D. There was an increase in the money supply in excess of the growth rate of real GDP.

2.What were some of the costs of the hyperinflation? (Check all that apply.)

A. People spent time exchanging money multiple times per day.

B. There were increased costs from differential pricing between the black market and the official market.

C. Price controls were applied.

D. Businesses were forced to adjust prices several times per day.

3.What were some of the benefits? (Check all that apply.)

A. Businesses were allowed to introduce differential pricing, such as charging different prices for mini-bus rides.

B. The government gained the seignorage.

C. Most citizens became trillionaires.

D. The black market that developed sold goods at lower prices than the official markets.

4.What were some of the adaptations that the country adopted to cope with the situation? (Check all that apply.)

A. The adoption of fiscal restraint by the government.

B. Redenominations of the Zimbabwean dollar.

C. The use of the black market for many transactions.

D. The use of foreign currencies for tra

Explanation / Answer

1. What was the root cause of hyperinflation in Zimbabwe?
D. There was an increase in the money supply in excess of the growth rate of real GDP.

2.
A. People spent time exchanging money multiple times per day.

B. There were increased costs from differential pricing between the black market and the official market.
D. Businesses were forced to adjust prices several times per day.

3.What were some of the benefits?
D. The black market that developed sold goods at lower prices than the official markets.

4. What were some of the adaptations that the country adopted to cope with the situation?
B. Redenominations of the Zimbabwean dollar.
C. The use of the black market for many transactions.
D. The use of foreign currencies for transactions

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.