Question

Do you believe that we could ever experience hyperinflation in Canada? How could it start and how would it likely impact you personally?

Answer 1

It is dependent upon economic policies whether country will hit hyper inflation or not. Causes of hyperinflation are:

• Increase in Money supply: If there is rise in money supply due to any economic activity by the central bank of the country, people will be holding more cash with them which raise their willingness to pay for goods. They will even pay for that good which they never wanted if they have enough cash in their pockets. Rise in money supply will raise aggregate demand of goods while aggregate supply of goods remains the same which results in rising inflation in economy.
• Demand pull inflation: If there is rise in demand of goods due to rise in government spending, increase spending on consumption, it will take price high.

Personally hyperinflation will lower the real value / purchasing power of money holded by me which means I would be able to buy less units of goods and services from the same dollar.