The inflation rate of Country Alpha in 2014 was 35 Due to th

The inflation rate of Country Alpha in 2014 was 3.5%. Due to their war with Country Beta their government deficit soared causing the inflation rate to rise to 40% in 2015. This large increase in the inflation rate is known as

A.hyperinflation.

B.unexpected inflation.

C.wage-price spiral.

D.expected inflation.

Solution

Answer is A. Hyperinflation.

Explanation:

Hyperinflation is a concept used in the situation where the price level increases at such extreme rates which may be due to an extreme situation like war, lack of confidence of people in currency, etc.