Demand-pull inflation is an inflation caused by excess demand. This happens when demand outweighs supply. To curtail demand pull inflation, governments and central banks would have to implement a tight monetary and fiscal policy. Examples include increasing the interest rate or lowering government spending or raising taxes.
By increasing interest rates, lowering government spending or raising taxes, the government will be taking out the excess money in circulation.
With high interest rates, people would rather save and invest their monies rather than spend it since it attracts high interest. This will take out the excess money in circulation in the economy, reduce people spending power.
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