When inflation occurs, the state's fiscal and monetary policies to curb inflation generally include: 1, raising the bank reserve ratio; 2. Raise the deposit and loan interest rate; 3. Reduce currency circulation; 4, the implementation of "tightening" fiscal policy (that is, there is a budget surplus); 5. Raise the tax rate; 6. Increase the bank's "directional notes"; 7. Reduce the loan amount; 8, reduce the amount of government financial bidding and purchasing, etc.

When deflation occurs, the state will implement proactive fiscal and monetary policies, generally including: 1, increase economic construction expenditure and reduce taxes to stimulate the growth of total demand; 2. Reduce the deposit interest rate; 3. Increase the currency circulation; 4. Strengthen infrastructure construction; 5. Improve the social security system and reduce the "precautionary saving tendency".

Inflation, a concise definition, refers to the phenomenon that the money supply is greater than the actual demand of money, that is, the actual purchasing power is greater than the output supply, which leads to the devaluation of money and the sustained and general rise of prices for a period of time. Its essence is that the total social demand is greater than the total social supply (supply is far less than demand).

Deflation: When the currency in circulation in the market decreases, people's monetary income and purchasing power decrease, which affects prices and leads to deflation. Long-term monetary tightening will inhibit investment and production, leading to increased unemployment and economic recession. Its essence is that the total social supply is greater than the total social demand (supply far exceeds demand).