Question

Explain the fiscal measures to overcome inflation.

Answer 1

Answer:

Explanation:

There are three measures to control and overcome inflation. They are as follows:

• Monetary contrl
• Fiscal control
• Price control

There are two components of Fiscal policy. They are revenue of government and expenditure of government. The Government controls inflation through this policy by either decreasing its expenditure or through reduction in private spending and in some cases by doing both.

The Government restrict the private spending by taxing the private  businesses more. When the private spending is on the higher side,the Government curtails down their expenditure in order to control inflation. However it is not always prudent and practical to reduce Government expenditure as these expenditures are important to achieve long term goals in the field of health, defense, education, and law and order.

Therefore reducing private spending is a preferred bet than curbing Government expenditure. When the government controls inflation through reduction in private spending by imposing more  taxes it leads to decrease in the total expenditure of an individual.

Hope this helps.