Hyperinflation Can Best Be Stopped If a Government

question 23

Multiple Choice

Hyperinflation can best be stopped if a government

• A)reforms its budget process, introduces new money, and pegs the exchange rate of the new money to that of a stable foreign currency
• B)imposes wage-price controls but lets money supply grow at high levels for a prolonged time to accommodate the high demand for money
• C)is replaced by another government more friendly towards industrial nations so more foreign aid can be obtained
• D)implements supply-side policies in an effort to simultaneously reduce the rates of inflation and unemployment
• E)gradually reduces money supply growth so a large increase in unemployment can be avoided

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Definitions:

Loaves

Typically refers to units of bread shaped and baked in specific sizes and forms but does not directly correlate to a distinct economic term.

Pounds

A unit of weight in the imperial system, equal to 16 ounces or approximately 0.453592 kilograms.

Consumer Equilibrium

A state in which a consumer has allocated their income in a way that maximizes their total utility, given the prices of goods and services.

Total Utility

The total satisfaction received from consuming a particular quantity of goods and services.