Question

write me 3 Pages Article about Hyperinflation in Zimbabwe country

Requirement:

1. background

2. Economic policies apply

3. role of institution

4. your Analyses

5. key lesson learn

6. Conclusion

Answer 1

Answer:- In economics, hyperinflation is used to describe situations where the prices of gods and serices rise uncontroooably over a defined time period.In other  words, hyperinflation is extremely rapid inflation. Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American Economist professor Phillip Cagan, first studied the economic concept in his book" The Monetary Dynamics of Hyperinflation". Hyperinflation quickly devalues the local currency in foreign exchange markets as the prices of goods and services rise in conjunction with the increase in the money supply.. This practice causes a vicious cycle as prices rise, people hoard more goods inturn, creating ahigher dmand for goods and further increasing prices. if hyper inclation conitinues unabated, it nearly always eventually causes a major economic collapse.

Zimbabwe is one country that experienced significant hyperinflation in the past. The zimbabwean dollar is no longer actively used nowadays, It is officially supended by the government due to rampant hyperinflation. The cause of Zimbabwe's hyperinflation was attributed to numerouseconomic shocks. The national government increased the money sypply in respnse to rising national debt, therewere significant declines in economic output and exports and political corruption was coupled with a fundamentally weak economy. Land reform program, warfunding , economic mismanagement also cause for hyperinflation.

Effects:- The currency was heavily depreciated and this causesevere economic problems. Currency under valuation is such that they ahd to print money with denominations in trillions. Hundreds or thounsands of people were uprooted at the height of the crisis, ie population displacement. Life expectancy dropped. it has one of the lowest life expectancy in the world.

Institutions play an important role by reducing uncertainties and establishing a stable economy and social relations. Though formal rules and informal norms and traditions. Institutions determine what is acceptable and unacceptable to a society.Institutions determine the costs of economic transactions.

Analyses:- people couldn't afford basic goods. prices rising faster than wages and incomes. No credit available. The entire financial system became undermined, banks closed and were unwilling ot lend any money. Switch to a barter economy. Business increasingly switched to the use of  foreign currency. Lost savings. Damange to business confidence. The extent of hyperinflation and fall in output disrupted normal economic activity and saw zimbabwe GDP shrink. It affects investors for a long time.

in conclusion find that excessive money growth is more likely to have cause hyperinflation than private sector price speculation. It erodes the value of currency and can render it worthless. The effects on a nations economy is substantial. Hyperinflation is not good for the economy. Inflation will always reduc the value of money, unless  interest rates are higher than inflation,