00:01
So if economists predict that inflation will increase, the government should take which actions? to fight inflation, there are two different actions that can be taken typically.
00:23
Both are used to, let's say, reduce demand.
00:28
This is because when you have higher demand, it will cause the price to be higher.
00:34
And this would cause inflation.
00:36
So the typical way to slow down inflation is to reduce demand.
00:46
And there are two typical ways from the options to reduce the demand.
00:50
First of all is to decrease government spending.
01:04
So to decrease the government spending, it is going to to reduce the pressure on price because it actually reduces the total overall demand in the economy.
01:35
Government spending is a big budget and a lot of times the government spending will cause debt, public debt or public deficit.
01:45
So decrease the government spending is going to decrease the overall demand by reducing the public debt or deficit...