The Fiscal policy is largely based on the ideas of the British economist John Maynard Keynes (1883-1946), who argued that governments could stabilize the business cycle and regulate economic output by adjusting spending and tax policies. His theories were developed in response to the Great Depression, which defied classical economics' assumptions that economic swings were self-correcting. Keynes' ideas were highly influential and led to the New Deal in the U.S., which involved massive spending on public works projects and social welfare programs.
Fiscal policies can be expansionary, contractionary or neutral.
In this case the government will use contractionary policies which means it is going to increase taxes and reduce spending. In real life the government uses monetary policies rather than fiscal policies to slow inflation.
