Inflationary policies

Inflationary policies are government actions aimed at increasing the overall level of prices in an economy. They typically involve lowering interest rates, increasing the money supply, or boosting government spending. The goal is to encourage spending and investment, which can stimulate economic growth, especially during periods of stagnation or recession. However, if overused, these policies can lead to excessive inflation, where prices rise rapidly, reducing the purchasing power of money and potentially causing economic instability. Policymakers balance these effects carefully to support growth without triggering harmful inflation.