Inflation can be categorized into different types based on the rate at which prices rise. Let's match the descriptions with the types of inflation provided:
1. Monthly price increase greater than 10%:
- This extreme level of inflation is very rare but highly destructive. It can hurt lower and middle-income people significantly.
- Type of Inflation: Hyperinflation (d)
2. Prices rise more than 50%:
- When prices increase at such a high rate, it indicates a severe inflationary situation.
- Type of Inflation: Hyperinflation (d)
3. Prices rise less than 3%:
- This mild form of inflation is characterized by a slow increase in prices over time.
- Type of Inflation: Creeping (a)
4. Purchasing power falls at a rapid rate:
- When inflation leads to a rapid decrease in the value of money, purchasing power diminishes quickly.
- Type of Inflation: Hyperinflation (d)
5. Supply struggles to keep up with demand since consumers buy greater quantities:
- This situation arises when demand outpaces supply due to increased consumer buying.
- Type of Inflation: Walking (b)
6. Can create an economic crisis:
- Certain types of inflation can trigger economic crises due to their adverse impacts on various economic factors.
- Type of Inflation: Hyperinflation (d)
In summary, hyperinflation is associated with extreme cases of rapid and uncontrollable price increases, while creeping and walking inflation represent milder forms where the rate of price increase is lower and more manageable over time. Each type of inflation has distinct characteristics and implications for an economy.
