An appropriate policy to pursue if an economy is experiencing demand-pull inflation is:
A) reducing taxes.
B) a tight money policy.
C) an easy money policy.
D) increasing government spending.

Question

Quizplus · Accepted Answer

A tight money policy, which involves reducing the supply of money and increasing interest rates, can help to cool down an overheating economy experiencing demand-pull inflation by making borrowing more expensive and reducing spending.

An Appropriate Policy to Pursue If an Economy Is Experiencing