Prof Dr.

Zeinab el gawady
Page (3) What is hyperinflation

Page (4-5) Causes of hyperinflation

Page (6) Effects of hyperinflation

Page (7) How to solve hyperinflation

Page (8) Examples

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Hyperinflation is an economic condition characterized by extremely
high and rapid inflation rates, typically above 50% per month,
leading to a sharp devaluation of a country's currency and a rapid
increase in prices for goods and services.

CPI month 2
- CPI Month 1

X 100 More than 50%

CPI Year 1

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 Excessive money supply:
When a government prints too much money to cover budget deficits .

 Economic shocks:
Natural disasters, wars, trade embargoes, and other external factors can
disrupt the supply chain and cause shortages of goods and services,
leading to price increases.
 Currency devaluation:
When a country's currency loses value, imports become more expensive,
which can lead to price increases and inflation.
 Speculation:
Speculators can increase hyperinflation by hoarding goods, driving up
prices even further.

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 Corruption:
Corruption can lead to mismanagement of the economy, undermining
confidence in the currency and causing hyperinflation.
 Political instability:
Political instability can also undermine confidence in the currency and
lead to hyperinflation.

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 Loss of purchasing power:
Decline in the standard of living for individuals and families due to the
reduction of currency value.
 Hoarding and shortages:
As the value of money declines rapidly, people may hoard goods as a store
of value, leading to shortages of essential goods such as food, medicine,
and fuel..
 Economic instability:
Hyperinflation can lead to a loss of confidence in the economy. This can
lead to a decline in investment and economic activity.
 Political instability:
Hyperinflation can also lead to political instability, as people become
frustrated with the government's inability to manage the economy. This
can lead to protests, civil commotions, and even regime change.

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Hyperinflation can be solved by implementing a combination of fiscal
D
and monetary policies, such as:
 reducing government spending,
 increasing taxes,
 raising interest rates, and
 promoting foreign investment.

However, It's important to note that hyperinflation is a complex issue and

requires a comprehensive approach to address effectively.

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Germany: October 1923
In October 1923, Germany faced a period of extreme inflation. The government
had printed too much money to finance war operations, and prices were
skyrocketing.
Argentina: 1975
Starting in 1975, Argentina’s inflation rate increased by an average of more than
300% per year until 1991. Several factors caused the situation including the
increase in the money supply without an equal increase in goods and services.

Zimbabwe: November 2008

Due to years of economic mismanagement by the government of Zimbabwe, in
November 2008, inflation hit its peak. The country’s inflation rate was, month over
month, 2,600%, or more than 231 million percent on a year-over-year basis.

Egypt: 2023
Due to the high cost of fighting terrorism in the last decade, the increase in
government spending, Covid- 19 lockdown which caused a shortage in the global
supply chain and Russia Ukraine war, the inflation exploded in Egypt in 2023.
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Thank You