Suppose a Country Is Experiencing a Hyperinflation

question 3

Essay

Suppose a country is experiencing a hyperinflation.Even a small sacrifice ratio would suggest that it would be incredibly costly for such a country to eliminate inflation.For example, suppose the sacrifice ratio is one, but inflation is running at 5000 per cent per year.Then the sacrifice ratio suggests that it would cost 50 years worth of output to get inflation to zero! This is obviously not right.Why does the sacrifice ratio not provide a good way of measuring the cost of ending a hyperinflation?

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