Of the following, what economic stabilizing policy is best used to reduce inflation?
A) the government decides to build a new transportation route
B) the government decides to increase spending on education and health care
C) the Bank of Canada decrease the money supply
D) the government decides to reduce personal income tax

Question

Quizplus · Accepted Answer

Reducing the money supply is a monetary policy tool used to decrease inflation by increasing interest rates, which discourages borrowing and spending, thereby reducing demand and slowing down inflation.

Of the Following, What Economic Stabilizing Policy Is Best Used