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Hyperinflation refers to a rapid and excessive increase in the general price level of goods and services in an economy. It is characterized by extremely high inflation rates that are often defined as monthly price increases of 50% or more. During hyperinflation, the value of a country's currency depreciates rapidly, and people lose confidence in its ability to store value. This often leads to people spending their money as quickly as possible before it loses even more purchasing power.

The causes of hyperinflation are complex and usually involve a combination of factors. A primary driver is often a significant and uncontrolled increase in the money supply by the government, typically to finance large budget deficits or war efforts. This can happen when a government is unable to raise sufficient revenue through taxation or borrowing. When the money supply grows much faster than the economy's ability to produce goods and services, prices are driven up.

Other contributing factors can include a loss of confidence in the government and its economic policies, political instability, and supply shocks that disrupt production. The psychological element is also important; as people expect prices to rise further, they change their behavior, exacerbating the inflationary spiral. For instance, businesses may raise prices preemptively, and workers demand higher wages, creating a vicious cycle.

Hyperinflation can have devastating economic and social consequences. It erodes savings, disrupts trade, and can lead to widespread poverty and social unrest. Restoring economic stability typically requires drastic fiscal and monetary measures, such as sharply cutting government spending, raising taxes, and implementing strict monetary policy to control the money supply. Stabilizing the currency and regaining public trust are crucial steps in overcoming hyperinflation.