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The economy is experiencing rapid inflation, pushing above 9%. Which fiscal policy action should the government implement in an attempt to fix this problem?

ARaise taxes
BIncrease Spending

Eliminate

CDecrease Interest Rates
DIncrease reserve requirements

Verified Answer :

Kalahira

In order to fix this problem, where in the economy experience rapid inflation of which they had pushed above nine percent, they should engage in a fiscal policy in which the government should implement in decreasing the interest rates. By this, they may engage of raising the assets.

I believe the answer is: D) Increase reserve requirementsReserve requirement refers to the amount of money that a bank must held for a certain period of time.

To handle inflation, the main method that the central bank use usually creating policies that would reduce the amount of money that circulated in the market.

By increasing reserve requirement, other banks would be forced to create programs that aimed to rake in as much money from the people as possible and reduce the amount of money circulated in the market.

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