Which of these is an alternative to monetary policy and aims to reduce inflation?
A) increase taxes
B) reduce the money supply
C) raise government purchases
D) reduce taxes

Question

Quizplus · Accepted Answer

Increasing taxes can reduce inflation by decreasing aggregate demand. When taxes increase, consumers and businesses have less disposable income to spend, which reduces the amount of overall demand in the economy. This decrease in demand can lead to lower prices and lower inflation.

Which of These Is an Alternative to Monetary Policy and Aims