Question

In the early 1990s, extremely high inflation rates of 2500% were common in Russia. During that time, we can say that as a result of those inflation rates, Russia was experiencing ___________________.
a. perpetual inflation
b. ultra inflation
c. hypo inflation
d. hyperinflation

Answer 1

Answer: Hyperinflation

Explanation:

Hyperinflation is a very high and accelerating inflation. It gradually destroys the real value of the local currency in the country as prices of all goods soar. This results in people minimizing their holdings in the currency and may switch to a more stable foreign currency, such as the United States dollar.

Typically, the general price level increases even more quickly than the supply of money as people try getting rid of the devalued currency quickly.

Hyperinflation is often caused by wars, sociopolitical upheavals or collapse in aggregate supply

Answer 2

Answer:

d. Hyperinflation

Explanation:

Russia experienced high inflation rates of 2500% in the 1990s due to hyper inflation which occured when the controlled economy in Russia shifted to a market oriented economy. This resulted in a very sharp increase in inflation.

During hyperinflation, the prices of goods and services continue to rise in a way that it is out of control.