Question

During a period of high inflation, what government actions can preserve the value of money? Select two options.

Answer 1

Answer:

forcing producers to sell at a certain price

Explanation:

Answer 2

Answer:

restricting the money supply by adjusting interest rates

Explanation:

As you may already know, inflation is the term used to refer to the exaggerated and continuous increase in the price of all products present on the market in a given country. Inflation can generate a lot of economic and even social damage, for this reason, it is necessary for the government to establish strategies that reduce the level of inflation in the country.

In the short term, the strategies that the government can adopt when inflation is high are to reduce spending, but to increase taxes and raise interest rates. With that, we can say that the government restricts the money supply within the country, limiting spending, but adjusting interest rates so that they get higher. As a result, the demand for products will be less than the supply. The result of this, is a tendency to decrease the price of products.