Excess demand inflation can be controlled through?
Answer Details
Excess demand inflation can be controlled through contractionary fiscal policy. This means that the government can reduce the amount of money it spends, increase taxes, or both, to reduce demand in the economy. By doing this, the government can reduce the pressure on prices caused by excess demand, ultimately helping to control inflation. Contractionary trade policy is not directly related to controlling inflation, but rather to regulating international trade. Conversely, expansionary fiscal and monetary policies, which involve increasing government spending and reducing interest rates respectively, are used to stimulate demand and promote economic growth, and are not effective in controlling inflation.