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Effects Of Hyperinflation On The People In Developing Countries (Essay Sample)


There are several effects of hyperinflation on the people living in these developing countries.


Hyperinflation in Developing Countries
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Hyperinflation in Developing Countries
The presence of hyperinflation is the case when the inflation (a rise in prices) reaches to an uncontrollable level and the value of money declines to a major extent. Hyperinflation is one of the most devastating economic phenomenon that any country can confront, and also has a strong potential to affect the economic stability of the affected country (O'Sullivan & Sheffrin, 2003). It prevalence is widespread in the developing part of the world that also tends to affect its economic growth and sustainability.
There are several examples available in the history when the developing countries faced hyperinflation. In 1945, the inflation condition in Hungary got worse and turned into a hyperinflation when its inflation rate raised to 207%. The condition was so worse that prices just took 15 hours to double. The citizens of the country suffered a lot due to the problem and their living standard rapidly fell due to the economic constraints. In 1994, Yugoslavia's hyperinflation rate reached to 64%. China confronted a hyperinflation in 1949 when its inflation rate was 14% and the rate of price-doubling was five days (The Journal, 2013).
There are several effects of hyperinflation on the people living in these developing countries. The most common and prompt effects are that as the value of money decreases, the living standard of people deteriorates and their purchasing power parity also declines. This leads them to enjoy fewer facilities than they used to before the hyperinflation. The savings of the people of these developing countries are distorted and the economy of the developing country that is already in a dire need of economic and f

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