Normally, when a country's economy collapses, it is accompanied by inflation, soaring prices, and continuous depreciation of the currency.

There is more and more money on the market and fewer and fewer resources. By the time ordinary people get money, materials are already scarce and prices have risen. When the economy collapses, prices soar, currencies depreciate, and most businesses become unsustainable, it is normal for the stock market to plummet.

Hyperinflation is a kind of uncontrollable inflation. When prices rise rapidly, currency quickly loses its value. This kind of vicious inflation generally means that demand far exceeds supply.

If there is an economic crisis in China, the RMB will depreciate against the US dollar. Domestic production levels will not be able to keep up, imports will not be able to keep up, and the money supply will be far greater than the physical goods on the market.

Inflation will cause a substantial decrease in people's purchasing power, and at the same time the country's actual income will also decrease. One is the tax system, which is mainly reflected in the lag in tax calculation and payment.

Extended information:

The impact of currency depreciation on the country:

Currency depreciation will first increase the domestic price of traded goods, and will also increase the domestic price of traded goods and non-traded goods. The substitution effect of non-tradable goods will also increase the price of non-tradable goods. The increase in the price level will mean a decrease in the real currency balance.

This leads to an increase in the demand for nominal currency balances. When the money supply remains unchanged, people will inevitably sell goods and financial assets to meet the increased demand for nominal currency, thereby improving the balance of payments. .

However, the effect of currency depreciation on improving the balance of payments will only occur if the money supply shrinks or remains unchanged, otherwise.

The increase in money supply offsets the increase in nominal currency demand caused by the depreciation of the local currency, and the international balance of payments will not improve or even worsen.

Baidu Encyclopedia - Economic Crisis

Baidu Encyclopedia - Currency Devaluation