: What procedures or practices does a government do generally to reduce the money supply from the economy when inflation rises?

Question

: What procedures or practices does a government do generally to reduce the money supply from the economy when inflation rises?

In: 3

Answer 1

The government can increase taxes and reduce spending on government projects.

The central bank can increase interest rates. So people take less loans and have to give more interests.

The central bank can sell treasury bonds.

The central bank can increase reserve ratios. In eli5 terms This is the ratio between the money you can loan and the money you must keep/not loan. Less money to loan less people take loans to buy things.