How can governments effectively control inflation?

How can governments effectively control inflation?

Governments can control inflation through monetary policy, fiscal policy, and regulating supply and demand.

What specific monetary policies are used to combat inflation?

Central banks may raise interest rates, reduce money supply, or sell government bonds to combat inflation.

Are there any risks associated with these policies?

Yes, raising interest rates can slow economic growth and increase unemployment if done too aggressively.

How does inflation affect everyday consumers?

Inflation erodes purchasing power, making goods and services more expensive for consumers.

What role do supply chain issues play in inflation?

Supply chain disruptions can lead to shortages, driving up prices and contributing to inflation.