Question

discuss the technique to control inflation​

Answer 1

Explanation:

1. Monetary policy is one of the most commonly used measures taken by the government to control inflation. 
2. The goal of a contractionary policy is to reduce the money supply within an economy by decreasing bond prices and increasing interest rates
3. Inflation is considered to be a complex situation for an economy.
4. It is not easy to control inflation by using a particular measure or instrument.

Answer 2

Answer:

The technique to control inflation are as follows:

Monetary policy – Higher interest rates reduce demand in the economy, leading to lower economic growth and lower inflation.

Control of money supply – Monetarists argue there is a close link between the money supply and inflation, therefore controlling money supply can control inflation.

Supply-side policies – policies to increase the competitiveness and efficiency of the economy, putting downward pressure on long-term costs.

Fiscal policy – a higher rate of income tax could reduce spending, demand and inflationary pressures.

Wage controls – trying to control wages could, in theory, help to reduce inflationary pressures. However, apart from the 1970s, it has been rarely used