Question

Hyperinflation is the most dangerous type of inflation reflected by the price rise by-

• A. 16 percent or more per annum
• B. 3 percent per annum
• C. 10 percent per annum
• D. 6 to 9 percent per annum

Hint:

Hyperinflation is rare but destructive. It erodes currency value rapidly and destabilizes the economy.

Answer 1

The Correct Option is A

Step 1: Understanding inflation.
Inflation is the general rise in the price level of goods and services in an economy over time.
Normal inflation (3–6%) is usually tolerable, but very high inflation harms purchasing power.
Step 2: What is hyperinflation?
Hyperinflation is an extremely rapid and out-of-control rise in prices, often above 16% or more per annum, and sometimes even crossing 100% or more per month in extreme cases.
Examples include Germany in the 1920s and Zimbabwe in the 2000s.
Step 3: Analysis of options.
- (1) 16 percent or more per annum: Correct, hyperinflation is dangerous and starts from very high rates.
- (2) 3 percent per annum: Mild inflation, not dangerous.
- (3) 10 percent per annum: High inflation, but not considered hyperinflation.
- (4) 6 to 9 percent per annum: Moderate inflation.
Step 4: Conclusion.
Thus, hyperinflation is reflected by price rises of 16 percent or more per annum.