In order to control inflation, the government should
Answer Details
In order to control inflation, the government should "adopt restrictive monetary policy." This means that the government should reduce the amount of money in circulation in the economy, in order to reduce consumer demand and control rising prices.
The government can adopt several measures to implement a restrictive monetary policy. One such measure is to increase the reserve requirements for banks, which means banks have to hold more funds in reserve and can lend out less money to consumers. Another measure is to increase the interest rate at which banks borrow from the central bank, which increases the cost of borrowing for consumers, and thereby reduces spending and demand.
On the other hand, reducing the cost of borrowing, buying securities in the open market, or discouraging savings are measures that can stimulate economic growth and increase the money supply. These measures are not suitable for controlling inflation because they increase consumer demand and spending, which can lead to higher prices and inflation.