Question

What type of fiscal policy is needed for inflation?

Answer 1

Fiscal policy is a powerful weapon to restore economic stability during inflation and deflation. During inflation, fiscal policy can be of many types, such as:

1. Control over public expenditure
2. Increase in taxes
3. Increase in public borrowings
4. Delay in the payment of old debts
5. Surplus budget
6. Overvaluation of money