A demand-pull inflation problem can best be solved by
A)An increase in production of goods and services.
B)A reduction in desired spending.
C)An increase in aggregate demand.
D)A reduction in aggregate supply.

Question

Quizplus · Accepted Answer

Demand-pull inflation is caused by excessive demand for goods and services in the economy. To solve this problem, a reduction in desired spending is necessary. This can be achieved through tightening fiscal and monetary policies, such as raising interest rates or reducing government spending. Increasing production or aggregate demand may worsen the inflation problem, while reducing aggregate supply would result in stagflation (a combination of inflation and stagnant economic growth).

A Demand-Pull Inflation Problem Can Best Be Solved by