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The inflation rate of Country Alpha in 2014 was 3.5%. Due to their war with Country Beta their
government deficit soared causing the inflation rate to rise to 40% in 2015. This large increase in
the inflation rate is known as
A.hyperinflation.
B.unexpected inflation.
C.wage-price spiral.
D.expected inflation.
Solution
Answer is A. Hyperinflation.
Explanation:
Hyperinflation is a concept used in the situation where the price level increases at such extreme
rates which may be due to an extreme situation like war, lack of confidence of people in
currency, etc.

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The inflation rate of Country Alpha in 2014 was 3.5. Due to their w.pdf

  • 1. The inflation rate of Country Alpha in 2014 was 3.5%. Due to their war with Country Beta their government deficit soared causing the inflation rate to rise to 40% in 2015. This large increase in the inflation rate is known as A.hyperinflation. B.unexpected inflation. C.wage-price spiral. D.expected inflation. Solution Answer is A. Hyperinflation. Explanation: Hyperinflation is a concept used in the situation where the price level increases at such extreme rates which may be due to an extreme situation like war, lack of confidence of people in currency, etc.