What Are The Remedies Of Inflation?


1 Answers

Suny Day Profile
Suny Day answered
Monetary inflation is the increase of the money supply compared to the economic activity.
Price inflation is an increase in the amount of money needed to purchase goods and services.  Price inflation usually occurs as a result of monetary inflation - after a lag time.
To have a remedy implies that inflation is something that needs to be corrected.  Clearly, the people who effect monetary policy choose to cause inflation.  Presumably, they see inflation as less of a concern than other conditions and to "remedy" inflation would be undesireable.  If the money supply were held steady (or as near as cold be determined) in relation to the economic activity, the only way governmenns could increase spending would be to increase taxes.  It may be wise for governments to refrain from increasing spending but is often not a popular approach.

Answer Question