Sunday, August 14, 2011

Fiscal and monetary measures taken by government in solving inflation?

do you mean like what we are doing now, or what we should do? We should decrease the money supply by increasing the interest rate, and for the fed to sell bonds and increase discount rate(monetary policy), and the government should fiscally spend less as a government and to increase taxes (income). This is theoretically what we should do to decrease inflation, but what we are doing now is to increase government spending and decrease taxes (fiscally speaking, no idea about the monetary.)

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