During a Bout of Hyperinflation, Suppose the Country of Weimar

question 87

Multiple Choice

During a bout of hyperinflation, suppose the country of Weimar announces it will be rolling out a new currency, the Weimar Mark, which is worth 1 million Marks. Neutrality of money suggests this change will:

• A) not influence prices in the overall economy.
• B) dramatically decrease real wealth.
• C) only change core inflation.
• D) None of these are true.

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Definitions:

Public Saving

The difference between government receipts and government spending, representing the amount the government either saves or borrows.

Positive

In economics, referring to statements or analyses that are fact-based and describe the world as it is, rather than how it should be.

Budget Deficit

Occurs when a government spends more money than it receives in revenue over a specific period of time.

Public Savings

The difference between government revenue and government spending, representing a net saving or borrowing position.