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Suppose the government decided that, starting tomorrow at midnight, we are going to massively increase the amount of money in the economy by multiplying all
Suppose the government decided that, starting tomorrow at midnight, we are going to massively increase the amount of money in the economy by multiplying all dollar amounts by 16. All prices will suddenly get 16 times higher and all amounts of money held in cash or bank accounts will also get multiplied by 16. What would happen to the economy as a result of this decision? a. Nothing. No practical change for anyone. b. There would be hyperinflation, leading to an economic collapse like in Zimbabwe in the 2000s or Germany in the 1920s. c. People would stop using dollars and switch to another currency. d. There would be severe inflation, and wage earners and people on fixed incomes would see their purchasing power drastically reduced
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