policies to reduce inflation

Question 1

policy to reduce demand pull inflation

Answer 1

-contractionary fiscal/monetary policy

-conflict of objectives
-impact on investment
-impact on indebted
-current account deficit and strong exchange rate

Question 2

policies to reduce cost-push inflation

Answer 2

-implement/reduce inflation target
-reduce VAT/subsidies to firms
-intervene in forex markets to influence exchange rate

Question 3

policies to reduce high long-term inflation rates

Answer 3

-interventionist: increased spending on infrastructure

market-based: reduce benefits
-deregulate hiring/firing

-no guarantee of success
-cost
-time lags