Question

Explain the reasons of Hyperinflation in Zimbabwe:

Answer 1

The increase in money supply with excess of growth rate of GDP, caused people to exchange money multiple times a day. Various economic shocks in the country caused the hyperinflation. As a result of rising National debt the government increased money supply, due to which they were many declines in the economic output and Exports as well as the situation caused political corruption which fundamentally weakened the economy.
High National debt, decline in economic output, decrease in earnings from exports, price controls, economic and political drawbacks of the government caused the government of Zimbabwe to print money in hyperinflation. Later in 1990s, the series of Land Reforms introduced by Zimbabwe which included redistribution of land from the White farmers to the black, resulted in a large fall of food production in the country. Which ultimate Lee affected the economy with a sharp fall in output and as a result of which there was a collapse in the bank lending of the nation.
With the economic output decreasing the government debt of the country increased, to which the government responded by printing more and more of the money, which led to inflation.