Outline measures that the government may employ to control the following types of inflation;

Business studies study module
  • Cost push inflation
    • By controlling the wages and salaries in the economy
    • Restricting import on raw materials
    • Reducing taxes on production
    • Subsidizing the production
    • Employing the price control techniques
  • Demand pull inflation
    • Increasing the rate of interest of lending to the commercial banks
    • Selling govt. securities on O.M.O
    • Increasing the commercial banks cash/liquidity ratio
    • Increasing the compulsory deposits from the commercial banks to the central bank
    • Putting in place the selective credit control measure
    • Directives to the commercial banks
    • Request to the commercial banks
    • Reducing govt. expenditure
    • Increasing income taxes
    • Producing commodities that are short in supply
    • Restricting terms of hire purchase and credit terms of sale
    • Controlling export


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