How does fiscal policy restore an economy that is experiencing high inflation?

Inflation can be caused by several factors which include among others too much money in circulation and excess demand. Contractionary fiscal policy will cut down government spending, hence reducing the amount of money in circulation. With less money in circulation, it is expected that the aggregate demand in the system which includes government spending will fall, hence the economy will gradually move back to equilibrium where aggregate demand equals aggregate supply and prices are lower than they are during inflationary period.