When hyperinflation is expected to occur in the near future we expect ... Real GDP to...
When hyperinflation is expected to occur in the near future we expect ...
| Real GDP to increase |
| For consumers to spend their money as quickly as possible because consumers want assets that will hold their value. This creates disruptions in economic activity |
| Nominal GDP to decrease |
| For consumers to hold on to their money to spend in the future |
Homework Answers
Hyperinflation increases nominal GDP because Nominal GDP is directly related to price.Real GDP falls because higher price reduces real GDP.The consumers increase their spending because the current prices are relatively less than the expected future prices.
Thus,option second holds.
Answer-Second option
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When hyperinflation is
expected to occur in the near future we expect ...
Real GDP to...
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1, 2, 3 and 4 please!
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