http://www.economicshelp.org/blog/economics/reducing-inflation-without-interest-rates/ Economics Blog - current events and economics essays Thu, 29 Jul 2010 08:25:39 +0000 hourly 1 http://wordpress.org/?v=3.0 http://www.economicshelp.org/blog/economics/reducing-inflation-without-interest-rates/comment-page-1/#comment-3571 Md. Alauddin Majumder Tue, 02 Jun 2009 18:28:22 +0000 http://www.economicshelp.org/blog/?p=699#comment-3571 IS-LM framework suggests that printing money worsens inflationary situation by triggering aggregate demand. To curb inflation in this circumstances requires an offsetting force. Govt. may resort to policy of contraction (by only cutting govt. expenditure since questioner wants not to increase tax- the other fiscal tool). This is a kind of policy mix (monetary and Fiscal) which results in reduced inflation with desired low rate of interest. IS-LM framework suggests that printing money worsens inflationary situation by triggering aggregate demand. To curb inflation in this circumstances requires an offsetting force. Govt. may resort to policy of contraction (by only cutting govt. expenditure since questioner wants not to increase tax- the other fiscal tool). This is a kind of policy mix (monetary and Fiscal) which results in reduced inflation with desired low rate of interest.

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