Government uses _____method to avoid inflationa.expansionaryb.contractionaryc.None of the above

The government uses a method to avoid inflation. The options are:

a. Expansionary b. Contractionary c. None of the above

To determine the correct answer, we need to understand the purpose of each method in relation to inflation.

1. Expansionary: This method involves increasing government spending and/or reducing taxes to stimulate economic growth. By injecting more money into the economy, it aims to increase consumer spending and business investment. This approach is typically used during times of economic downturn or recession to boost demand and prevent deflation. However, it can also lead to inflation if not carefully managed.

2. Contractionary: This method involves reducing government spending and/or increasing taxes to slow down economic growth. By reducing the amount of money in circulation, it aims to decrease consumer spending and business investment. This approach is typically used during times of high inflation to cool down the economy and stabilize prices.

Based on the given options, the correct answer would be:

b. Contractionary

This is because the government uses contractionary measures to avoid inflation by reducing spending and increasing taxes to slow down economic growth and stabilize prices.