Question

1) What is hyper-inflation, and how bad was it in Zimbabwe and today?

2) Why is Zimbabwe experiencing record high inflation again?

3) What does Zimbabwe need to do to lower its inflation rate?

Answer 1

1) Hyperinflation describes rapid or excessive, or out-of-control general price increases in an economy , that is inflation is a measure of the pace of rising prices for goods and services.

Hyperinflation in Zimbabwe was a period of currency instability . By mid-July 2019 inflation had increased to 175%, sparking concerns that the country was entering a new period of hyperinflation.

2)The cause of Zimbabwe's hyperinflation again was attributed to numerous economic shocks. The government increased the money supply in response to rising national debt, thus economic output and exports fall.

3)Require banks to hold a higher percentage of their assets as cash and to lend a lower percentage, increase the interest rates on loans to banks to above market levels , raise taxes, reduce the production of currency and government spending.