Control of Inflation/Deflation - SS2 Economics Past Questions and Answers - page 1
What tool can central banks use to control inflation?
Expansionary monetary policy
Expansionary fiscal policy
Quantitative easing
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What can governments do to control deflation?
Increase taxes
Decrease government spending
Increase government spending or decrease taxes
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How does increasing the exchange rate affect inflation?
It decreases demand for exports and increases inflation
It decreases demand for imports and decreases inflation
It increases demand for exports and decreases inflation
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What is quantitative easing?
An increase in taxes to control inflation
A decrease in government spending to control deflation
A tool used by central banks to increase the money supply and stimulate demand
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What is the main goal of controlling inflation and deflation?
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Name one tool that governments can use to control inflation.
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