Two policy levers to cool an overheating economy

What are the two main macroeconomic policy tools used to slow an economy and bring down inflation? Explain how each works.

Monetary policy and fiscal policy. The central bank tightens by raising policy rates or shrinking its balance sheet, which raises borrowing costs and cools demand; the government tightens fiscally by cutting spending or raising taxes, reducing aggregate demand directly. Note the lags and that monetary policy is the main tool in practice.