To reduce the high rate of inflation in the economy, the government should?

To reduce the high rate of inflation in the economy, the government should?

Answer Details

When the economy experiences high inflation, the value of money decreases, and prices of goods and services increase significantly. To reduce this situation, the government can implement a contractionary fiscal policy, which involves increasing taxes and decreasing government spending. This policy can be achieved by increasing taxes and reducing government spending, which will decrease the amount of money in circulation and reduce demand for goods and services. The reduction in demand will lead to a decrease in prices and ultimately lead to a reduction in the inflation rate. Therefore, the answer is to increase taxes and have a budget surplus.