all of the following statements about the use of the currency shown in image 1 in china under the yuan dynasty are factually accurate. which best explains why the currency often led to hyperinflation?
Why did the currency shown in image 1 in China under the Yuan Dynasty often lead to hyperinflation?
During the Yuan Dynasty in China, the excessive issuance of paper currency without sufficient backing by tangible assets was one of the primary reasons for the hyperinflation that occurred. The currency shown in image 1 was initially introduced to facilitate trade and reduce the need to carry heavy copper coins. However, several factors contributed to the devaluation of this currency and the subsequent hyperinflation:
1. Over-Issuance: The government printed an abundant amount of paper money to finance its extravagant projects and military campaigns. This led to a surplus of currency in circulation, causing a decrease in its value.
2. Lack of Backing: The paper currency was not properly backed by precious metals like gold or silver. Without this backing, the value of the currency solely relied on public trust and government decrees, making it susceptible to devaluation.
3. Counterfeiting: The lack of sophisticated anti-counterfeiting measures resulted in widespread counterfeiting of the currency. As counterfeit notes flooded the market, it further eroded the value of legitimate currency.
4. Loss of Confidence: Hyperinflation occurred as people began to lose confidence in the currency’s purchasing power. With prices skyrocketing and the value of money diminishing rapidly, hyperinflation became inevitable.
5. Economic Instability: The unstable economic conditions, combined with excessive government spending and a weak fiscal policy, created an environment conducive to hyperinflation. The loss of value in the currency negatively impacted trade and commerce.
In summary, the over-issuance of unbacked paper currency, coupled with counterfeiting, loss of public confidence, and economic instability, were the main reasons why the currency shown in image 1 during the Yuan Dynasty in China often led to hyperinflation.