If an economy suffers from a high rate of unemployment, the government, directly or indirectly, should encourage increase in private and/or public sector spending, i.e., it should follow an expansionary fiscal policy. This kind of fiscal policy is resulted in increasing production and creating new job opportunities. On the other hand, if an economy suffers from a high rate of inflation, the government, directly or indirectly, should encourage decrease in private and/ or public sector spending, i.e., it should follow a contractionary fiscal policy. This kind of fiscal policy will diminish the increasing pressure on prices.