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This picture was taken in Germany in 1923 and shows children playing with stacks of banknotes. Which of the following statements are true?

3. This picture was taken in Germany in 1923 and shows children playing with stacks of banknotes.

Which of the following statements are true?

 

  • Gold can serve as a hedge in times of hyperinflation because its supply cannot be increased as easily as banknotes. In other words, it is very unlikely that we will one day see children play with bars of gold.
  • The fact that the real value of money was very low could explain why these children were allowed to play with stacks of banknotes.
  • In cases of hyperinflation, people tend to wait for the last moment to use their wage to buy goods.
  • In this kind of scenario, holding gold should be avoided at all costs.
  • This picture illustrates the effects of hyperinflation (i.e. when a country experiences very high and accelerating inflation rates that erode the real value of money).