what policies should government adopt to prevent inflation and deflation in macro economy?
463789
The government in macroeconomics can utlize a number of what are called monetary policies to contract or expand the money supply.  This affects deflation or inflation.  The most common one used is to change the over night lending interest rate to banks.  This is what people are talking about when they say the fed is raising interest rates.  Another thing the gov't can do is issue or buy back government bonds/bills.  This can also increase or decrease the money supply.  Finally the government can change the required reserve ratio for banks which also controls the size of the monetary supply.
462610
Try the World Bank of the Federal Reserve
180940
Strong and growing. Thanks to the great fiscal managment of the Government. Monetary policy has been good to.\n\nCheck out the following: GDP and its growth rate, CPI increases, Unemployment rate, Interest rate just to name 4
488886
Inflation essentially devalues money.\n\nDuring WWII inflation in Germany reached nearly 100% per day.  People were paid daily and they spent it all on the way home because it would be worth about half the next day.\n\nThe main way I have seen inflation controlled is by manipulating interest rates.  By raising interest it costs more to "rent" money.  This has a tendency to slow most economic activity.  A slower economy will normally reduce inflation.\n\nIf you want inflation to go up, print more money.  \n\nI was on active duty with the US Air Force during President Carter's double digit inflation period.  Inflation was around 18% and we received "cost of living raises" under 2%.  We considered ourselves Uncle Jimmy's inflation fighters.  It took five or six years to get our pay back to where it was when "run-a-way inflation" took over the economy.  I hope that sort of crap never happens again.
116657
Inflation is classically caused by rising interest rates.  When money is harder to borrow (higher rates), harder to come by, then goods and services end up rising in value in response.  Because people need to borrow (from credit and ARMS and whatnot), they are forced to charge more for whatever they are selling or performing.  So they begin to raise their prices, and everyone else needs to do likewise.  The best way to stop inflation, generally, is to lower the interest rate.
269409
Government spending puts more money in the economy . . . but tht doesn't NECESSARILY have an eefect on inflation.  Government BORROWING (i.e. deficit spending) does create inflationary pressures.
316061
The US dollar is backed by the US Government, (not great but it works). The US government, thankfully, is back by its taxing power over the American people (which is VERY good). I don't think you'll have much to worry about. But I won't keep cash laying around not collect interest or working for you. Inflation is what will really eat away your money.
527762
If prices rise unexpectedly, consumers will update their expectations about future inflation. Any decrease in unemployment from inflationary money policy will only be temporary, but higher inflation will be permanent. Authorities (the Federal Reserve in our case) can assure the markets by issuing statements that they will not pursue inflationary money policy (like increasing the money supply). Over many years, if the Fed has made good on those statements, the market will think that those statements are credible. The cost of maintaining this trust is the loss of control over the short-term economy.
854105
False: the CPI is (at least supposedly) a measure of the inflation rate. It has been at or about 3% since it has been calculated.\n\nThe "supposedly" is to point out that many economists believe that the CPI is a flawed measure of the actual inflation rate, as it overstates the actual amount of inflation for most goods. The GDP deflator has been suggested as an alternative, but it tends to understate inflation, so a better alternative would likely be a retooled CPI.
318160
Go to\n\nhttp://woodrow.mpls.frb.fed.us/info/policy/#policy\n\nUnited States Monetary Policy\n\nWhat is Monetary Policy? | Instruments of Monetary Policy\nMonetary Policy Indicators | Federal Open Market Committee (FOMC)\nFOMC Minutes | FOMC Dates | Monetary Policy Objectives\nMonetary Policy Links\nMonetary Policy\n\nMonetary policy is a central bank's actions to influence the availability and cost of money and credit, as a means of helping to promote national economic goals.\n\n    * Monetary Policy, via Board of Governors\n      Monetary policy is made by the Federal Open Market Committee, which consists of the Board of Governors of the Federal Reserve System and the Reserve Bank presidents.\n    * Monetary Policy and the Economy, via Board of Governors\n    * U.S. Monetary Policy: An Introduction, via FRB San Francisco\n    * Comparative Central Banking and the Politics of Monetary Policy, remarks by Governor Laurence H. Meyer, May 21, 2001\n    * Technology, Macroeconomics, and Monetary Policy,\n      remarks by Federal Reserve Vice Chairman Roger W. Ferguson, Jr., December 6, 2000\n    * Challenges for Monetary Policymakers, remarks by Federal Reserve Chairman Alan Greenspan, October 19, 2000\n    * The Politics of Monetary Policy: Balancing Independence and Accountability, remarks by Governor Laurence H. Meyer,\n      October 24, 2000\n    * The Strategy of Monetary Policy, remarks by Alan S. Blinder, vice chair of the Board of Governors of the Federal Reserve System, The Region, Sept. 1995\n    * The Strategy of Monetary Policy,\n      remarks by Governor Laurence H. Meyer, March 16, 1998\n    * Formulating a Consistent Approach to Monetary Policy,\n      1995 Annual Report essay \n\nInstruments of Monetary Policy\nOpen Market Operations\n\n    * Fedpoint: Open Market Operations, via FRB New York\n    * Understanding Open Market Operations, via FRB New York\n    * Federal Open Market Committee (FOMC)\n    * Shadow Open Market Committee (The Region, June 1993)\n\nDiscount Window\n\nWhen the Federal Reserve System was established in 1913, lending reserve funds through the discount window was intended as the principal instrument of central banking operations. Although the window was long ago superseded by open market operations as the most important tool of monetary policy, it still has a complementary role in the day-to-day implementation of policy.\n\n    * Discount Rate — current and historical\n    * Fedpoint: The Discount Window, via FRB New York \n\nReserve Requirements\n\n    * Components of the Reserves Market\n    * Current Reserve Requirements of Depository Institutions\n    * Fedpoint: Reserve Requirements, via FRB New York\n\nMonetary Policy Indicators\nMonetary and Credit Aggregates\n\n    * M1 - Measure of the U.S. money stock that consists of currency held by the public, travelers checks, demand deposits and other checkable deposits including NOW (negotiable order of withdrawal) and ATS (automatic transfer service) account balances and share draft account balances at credit unions.\n\n      M1 Money Stock - Not Seasonally Adjusted — 1959 - present,\n      via FRB St. Louis\n      M1 Money Stock — 1959 - present, via FRB St. Louis\n\n    * M2 - M1 plus savings accounts and small denomination time deposits, plus shares in money market mutual funds (other than those restricted to institutional investors), plus overnight Eurodollars and repurchase agreements.\n\n      M2 Money Stock - Not Seasonally Adjusted — 1959 - present,\n      via FRB St. Louis\n      M2 Money Stock — 1959 - present, via FRB St. Louis\n    * M3 - M2 plus large-denomination time deposits at all depository institutions, large denomination term repurchase agreements, and shares in money market mutual funds restricted to institutional investors.\n\n      M3 Money Stock - Not Seasonally Adjusted — 1959 - present,\n      via FRB St. Louis\n      M3 Money Stock — 1959 - present, via FRB St. Louis \n\nShort- and Long-term Intere
817718
Be willing to accept a lower standard of living. The expansion of the economy is due in large part to dumping the gold standard and instituting the Federal Reserve. \n\nGo back and look at the history that caused these changes.\n\nAs for the income tax, how would you propose paying for public goods?
662029
inflation arises when there is surplus funds in circulation. when bank rate decreases more and more people take loans and all and then the surplus of money will be circulated among public. by adjusting interest rates government can regulate the inflation to an extent.
857178
a bad business situation doesnt necessarily means like great depression. however it means the business is not doing good, may be low revenues, high costs, and other negative factors pushing the sharprices down.\n\nthe best policy depends on the situation, but most often montary policy is used. the goverment doesnt change tax rules and therefore fiscal policy is not very common now. however monetary policy is used more now, to correct inflation and other economical objectives by raising and reducing interest rates. so this suggest monetary policy is better and convenient for the govt.
964801
Because if the government printed loads of money, inflation would go up and the economy would be ruined. \n\nIf only it was that easy...
794497
they set interest rates and control money supply. This is to keep inflation under control. They control money supply by selling and buying bonds, setting interest rates, they just change numbers...
615817
There is not any "Inflation Tax". Inflation is a condition of ecconomic cultures. Let me use the U.S ecconomy as an example. Here we have dollars. We are suppose to have gold reserves which backs each dollar we have circulating in society. However, as we spend money we do not have the gold rererves diminsih, which then in turn devalues the dollars it is suppose to represent. For each paper dollar we are suppose to have an equal amount of gold to cover its worth. What happens is we spend that god elsewhere and do not take out the corresponding dollars circulating in our society. When this occurrs we now have more paper money than we have gold to cover them. This devalues our money. We have to make up for this some how, it is impossible to have something that does not exist.\n\nSo, we then have dollars which are not as valuable as when we had the gold to cover them. Paper money, by itself is wothless. It is simply a peice of paper we put ink writing and pictures on to represent the gold our government and therefor we own. \n\nWe use to use gold, silver, nickle and copper as forms of currency. Our government decided all this material were just to heavy and cumbersome for us to carry around. So, our government took the Gold and in exchange gave out paper money to represent that gold to those who turned it in. We supposedly kept using silver, nickle and copper as silver dollars, dimes, nickles, and pennies. \n\nOver time the silver was also taken and exchanged for coins with less and less ore content. Today these coins are made of materials which are as valueless as paper. \n\nThe government used the gold and other ores in ways it shouldn't have. The government continues to put out more paper money which does not have any gold or silver to back it up. This continues to devalue our money. \n\nThis devaluation is a large part of inflation. As the money devalues, it can be used to purchase less and less. This is called inflation. It takes more and more money to buy the exact same things. So, the government then raises wages in order to provide more "money" for citizesn. Purchasing power. So, as the dollar value decreases and its spending power decreases wages increase. We are not really earning more, we are just trying to keep up with the value of the paper dollar. \n\nThere are other factors which play into this as well. Interest rates, etc. However, this is the basic reason for inflation. Yes, if we were to take all the paper money and turn it in to the government there would not be enough gold and silver reserves to give us back our real wealth. \n\nScarey isn't it? It is a game our government and other goverments are playing with our very lives and ability to provide for ourselves and our families at stake.\n\nHaven't you heard of countries where it costs like hundreds of paper bills to buy a loaf of bread? Very scary stuff. \nAlso, other countries are doing this too. When we exchange our money for another countries money we either get more of theirs or less of theirs in exchange for ours. In england we get less, in candada we get more, in Mexico we get way more. It is the Gold which determines how much a paper currency is worth.
1086949
by 2 ways :using the fiscal policy( increase Gov. spending ) or by monetary policy (increase money supply)