How to deal with hyperinflation

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

By year-end 2025, according to BDO’s December report, the International Monetary Fund expected Zimbabwe to be:

On the brink of being hyperinflationary

Fluctuating between hyperinflation and high inflation

On the way out of being hyperinflationary

Hyperinflationary

As of December 2025, how many countries were expected to be classed as hyperinflationary?

How has Zimbabwe partially stabilised inflation after dropping the Zimbabwean dollar?

By introducing the Zimbabwe gold currency

By accepting financial assistance from the International Monetary Fund

By adopting the US dollar

By placing price controls on consumer goods

During Zimbabwe’s 2008 hyperinflation crisis, how often did Tanganda Tea apply for price adjustments from the National Incomes and Pricing Commission?

Sometimes twice a day

Once a month

Once a week

None of the other answers

Why is cash considered a ‘wasting asset’ during hyperinflation?

Governments frequently demonetise currencies

Its value erodes in the period between provision of goods and services and payment

All of the other answers

Banks restrict cash withdrawals above a certain level

Why are traditional annual budgets and long-range forecasts of limited use in hyperinflationary environments?

Interest rates become unpredictable

Prices and exchange rates can shift materially within weeks

Consumer demand becomes impossible to estimate

None of the other answers

Which of the following statements is true? Statement 1, when a company has liabilities in hard currency but assets in local currency, there is a risk that asset values will fall while liabilities retain their value, or statement 2, when a company has liabilities in hard currency but assets in local currency, it will have reduced access to sources of credit

Statement 1

Both statements

Neither statement

Statement 2

Under IAS 29, when is an economy considered hyperinflationary for financial reporting purposes?

Inflation reaches 100% in a single year

Annual inflation exceeds 50%

Cumulative inflation over three years is around 100% or more

Currency depreciation exceeds 30% annually

How are some businesses in Zimbabwe helping employees cope with inflation’s impact on wages?

Freezing wages but increasing bonuses

Paying salaries entirely in local currency

Reducing payroll frequency to conserve cash

Partially paying them in foreign currency and cost-linking allowances

How does Turkish company Nobel İlaç protect liquidity during inflationary periods?

By implementing predictable, contract-based receivable and payable structures

By applying aggressive price increases

By applying government subsidies

By reducing staffing levels temporarily

1 Unit