Study Economics notes on Control of Inflation for Secondary. Useful for revision, homework, and exam preparation in Zimbabwe.
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This is the Economics notes. It is a free notes for revision.
Control of Inflation [Mr Kaybee] - Inflation can be controlled through the use of anti-Inflationary policies. What are anti-Inflationary policies? - Are those measures that can be taken so as to reduce inflation. These include monetary policy, fiscal policy, income policy and supply side policy and prilce controls. 1. Monetary Policy - Inflation occurs when too much money chases too few goods. To control inflation, the Reserve Bank of Zimbabwe can take the following: a. increase the bank rate b. increase the Cash Reserve Ratio (CRR) of commercial banks c. Sell bonds and securities All these measures reduce the money supply in the economy and so does the inflation. 2. Fiscal Policy - Fiscal Policy refers to the regulation of government expenditure and taxation in order to control the level of spending in the economy. To control inflation the government can: a. increase income tax and corporation tax b. reduce government spending c. increase in Savings d. stop repayment of public debt e. surplus budgets All these measures will reduce consumer income and so does inflation. 3. Income Policy - Income Policy refers to the application of controls on the factor rewards such as wages. Income Policy helps reduce costs of production and thereby inflation. For a service that gives Honour, Dignity and Comfort contact Mr Kaybee on 071818 1255(App/Call)