Financial policy to solve the problem of deflation The Government extended the use of fiscal policy to solve the problem of deflation without increasing government expenditure and reduce the tax rate to increase the quantity of money circulating in the economy. Increase the consumption of the people. Increasing investment, employment and output increase, with revenue increases. Government policy requires a budget deficit, is the need to make expenditure exceeds revenue income of the Government means that the money that the Government received in the year, including income from the Government, and the Government's loan.
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