In a demand-pull inflation, if the Fed stops expanding the quantity of money
A) a cost-push inflation spiral will occur.
B) government expenditure will cause the demand-pull inflation to continue.
C) a deflation will occur.
D) the demand-pull inflation spiral ends.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when the demand for goods and services exceeds supply, often due to an increase in the quantity of money. If the Fed stops expanding the quantity of money, it reduces the amount of money available for spending, which can help to slow down or end the demand-pull inflation by reducing the pressure on prices to rise.

In a Demand-Pull Inflation, If the Fed Stops Expanding the Quantity