Concept:Fiscal policy can control inflation by reducing aggregate demand through lower government spending or higher taxes.
Explanation:Inflation often occurs when total demand in the economy is too high.
To control it, the government should adopt a contractionary fiscal policy.
This means the government should increase taxes and reduce its expenditure.
When government revenue is greater than government expenditure, it creates a budget surplus.
A budget surplus withdraws excess money from the economy and helps reduce demand.
This lowers inflationary pressure.
Balanced budgeting has no net effect, while tax holidays and budget deficit would increase demand.
Answer:D. budget surplus