What causes hyperinflation?
The collapse of Zimbabwe's economy and the government's response of printing more money to pay its debts have led to the highest inflation in the world. The Zimbabwwe dollar is currently trading on the black market at $30 million Zimbabwean for US $1.
Among the major causes of hyperinflation is a huge rise in money supply, decline in a flood of the nation's market with money unbridled increase in the money supply or the devaluation of the local currency caused by economic depression, calamity, political or social cataclysms, or war. This, in effect, hits the productivity of a nation leading to a sharp decline in availability of goods and services. It also leads to widespread unemployment.
Image: Zimbabweans carry their shopping home as they cannot afford a bus fare home. | Photograph: Alexander Joe/AFP/Getty Images
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