The value of the German mark fell due to excessive circulation of printed money leading to an increase in prices of goods. What is this phenomenon called?

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Inflation

Deflation

Hyperinflation

Stagflation

answer is C.

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Detailed Solution

The value of the German Mark fell due to excessive circulation of printed money, leading to an increase in the prices of goods. This phenomenon is called Hyperinflation.
Germany had to pay the war damages in gold since it had fought in the First World War mostly on borrowed money. In addition, France invaded Germany's most important industrial region, the Ruhr, to take its coal after Germany refused to pay the war damages. Germany replied by exercising passive resistance and carelessly printing paper money. As a result, the value of the German Mark decreased due to an excess of printed money in circulation. As a result, goods costs skyrocketed. For example, it was reported that Germans would fill carts with cash to buy a loaf of bread. This situation is called Hyperinflation.

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