One of the most common ways to reduce inflation is by using monetary policy.
The activities are done by a nation’s central bank to manage the money supply and affect interest rates are referred to as monetary policy.
When inflation is high, central banks can increase interest rates to discourage borrowing and spending, which can lead to a decrease in demand for goods and services.
This decrease in demand can cause prices to stabilize or even fall, leading to a decrease in inflation.
Another way to reduce inflation is through fiscal policy. The use of taxation and expenditure by the government to affect the economy is referred to as fiscal policy.
When inflation is high, the government can reduce spending and increase taxes to decrease demand and reduce inflation.
This procedure can be difficult since it may result in slower economic development and higher unemployment.
However, it can be an effective way to reduce inflation if implemented correctly.