Supply-side policy to reduce inflation would focus on
A)Decreasing the money supply.
B)Decreasing the interest rates to encourage investment.
C)Increasing the incentives to produce goods and services.

Question

Quizplus · Accepted Answer

A supply-side policy to reduce inflation would focus on increasing the incentives to produce goods and services. This could be done through measures such as reducing regulations, lowering taxes, and improving infrastructure. By increasing the supply of goods and services in the economy, prices would be pushed down, leading to a reduction in inflation. Decreasing the money supply (choice A) would be a demand-side policy to reduce inflation, as it would reduce overall spending in the economy. Decreasing interest rates (choice B) may also be a demand-side policy, as it would encourage increased borrowing and spending, rather than increasing the supply of goods and services.

Supply-Side Policy to Reduce Inflation Would Focus on