Increasing the government budgetary surplus or decreasing the deficit is desirable in a period of inflation.


Inflation is a continuous increase in the overall product prices in an economy, which can result from a variety of causes. Governments try to combat the phenomenon, as it leads to the devaluation of their currency and hurts the population.

Causes of Inflation (scheme).
Causes and Types of Inflation (Source: https://www.economicshelp.org)

By increasing its surplus or reducing its deficit, the government removes money from circulation, slowing down economic growth and, therefore, inflation. Thus, the value of the currency rises, and the growth of prices slows.

Both of these measures are achieved through increased taxation or reduced government spending. While these methods impact the people adversely in the short term, ultimately they are beneficial.