RUNAWAY INFLATIONS Meaning and
Definition
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Runaway inflation refers to an extreme form of inflation where prices increase at an uncontrollable rate, eroding the purchasing power of a currency rapidly and leading to a breakdown in the monetary system of a country. It is characterized by an accelerating price spiral whereby the value of money depreciates rapidly and the cost of goods and services shoots up significantly within a short period.
In such a scenario, people lose confidence in the currency and tend to spend it quickly as it loses its value swiftly. Suppliers and businesses also increase prices frequently to offset their rising costs, resulting in a vicious cycle of inflationary pressures. This phenomenon is often associated with economic instability, social unrest, and a decline in living standards.
A runaway inflation typically occurs due to various factors, including excessive money supply, excessive government spending, fiscal mismanagement, high levels of public debt, or macroeconomic shocks. It can be triggered by events such as war, political instability, economic crises, or the collapse of a financial system.
To combat runaway inflation, governments and central banks may adopt measures such as tightening monetary policy, increasing interest rates, reducing government spending, or implementing economic stabilization programs. However, if not addressed timely and effectively, runaway inflation can result in hyperinflation, where prices increase exponentially, rendering the domestic currency virtually worthless and leading to a complete breakdown of the economy.
Common Misspellings for RUNAWAY INFLATIONS
- eunaway inflations
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Etymology of RUNAWAY INFLATIONS
The term "runaway inflation" is derived from the combination of the words "runaway" and "inflation". Here is the etymology of both terms:
1. Runaway: The word "runaway" originated in the 16th century, stemming from the verb "run" and the suffix "-away". It was initially used to describe an animal escaping by running away. Over time, the term expanded to describe anything that runs or moves swiftly without restraint. In the context of economics, a "runaway" typically refers to a situation that escalates rapidly and gets out of control.
2. Inflation: The term "inflation" comes from the Latin word "inflatio", which means "a puffing up" or "blowing into". Initially, in the 14th century, it was used to describe the act of inflating something with air or filling it up like a balloon.
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