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

A demand-pull inflation occurs when there is too much demand compared to the supply of goods and services. Therefore, reducing desired spending would help to reduce the demand for goods and services, which in turn would help to bring down the price level and solve the inflation problem. Options A, C, and D would only increase the demand for goods and services, exacerbating the inflation problem.

A Demand-Pull Inflation Problem Can Best Be Solved by