How Do Governments Manage Inflation?

Imagine you have a piggy bank full of coins. When prices go up, it’s like the coins in your piggy bank are worth less. To help with that, governments can increase or decrease the number of coins, like using magic powers to control how much money is around. This helps keep prices from getting too high.

Take the quiz →

Examples

A government raises interest rates so people borrow less money for big purchases like cars.
The central bank prints fewer coins to slow the increase of prices.
When a country's price of bread goes up too fast, the government uses special tools to make it more affordable.

Ask a question

Discussion

Recent activity

Categories: Economics · inflation,government policy,monetary policy