What defines hyperinflation?

Hyperinflation is defined by soaring prices characterized by drastic increases in inflation, often exceeding 50% per month. This economic phenomenon typically occurs when there is a significant increase in the money supply that is not supported by economic growth. As a result, the value of currency rapidly declines, leading to a lack of confidence among consumers and investors. This situation can prompt people to spend money as quickly as possible, further accelerating inflation rates.

The other options describe economic conditions that do not align with hyperinflation. Stable prices indicate a controlled inflation environment, low inflation rates suggest a healthy economy, and deflationary trends indicate a decrease in overall prices, which is the opposite of hyperinflation. Understanding the essence of hyperinflation helps in grasping the consequences it has on an economy, including the social and political instability that can result from such extreme economic turmoil.