Final answer:
Hyperinflation in Venezuela is caused by the government's excessive spending and unsuccessful policy responses. Printing more money leads to high inflation rates, while price controls and new currency issuance have failed to address hyperinflation.
Step-by-step explanation:
Hyperinflation in Venezuela is primarily caused by the government facing extraordinary demands for spending that it cannot finance through taxes or borrowing. As a result, they resort to printing more and more money, leading to a situation of 'too much money chasing too few goods.' This excessive money supply causes prices to skyrocket, resulting in hyperinflation.
There have been various unsuccessful policy responses to address hyperinflation in Venezuela. One such response was price controls, where the government set maximum prices for goods and services. However, these controls often led to shortages and black market activities. Another response was the issuance of new higher-denomination currency, but this only exacerbated the hyperinflation.
The root causes of hyperinflation and the policy responses that were unsuccessful in addressing it in Venezuela can be attributed to the government's excessive spending and the ineffective measures taken to control inflation.