When the economy is faced with inflation, according to monetary policy, what should the government do?

Question

Quizplus · Accepted Answer

When the economy is faced with inflation, the government should follow a tight monetary policy. This involves increasing interest rates and reducing the money supply to decrease spending and slow down economic growth. Raising taxes would also decrease spending and slow down growth, but it would not be the primary tool used in monetary policy to combat inflation. Lowering taxes or taking total control of the economy would not effectively address inflation.

When the Economy Is Faced with Inflation, According to Monetary