Which one of the following policies is most likely to reduce the inflation rate?

[nammy]

Which one of the following policies is most likely to reduce the inflation rate?
A. Higher taxation
B. Higher government spending
C. Increased money supply
D. Lower interest rates

• This topic was modified 5 years, 11 months ago by admin.

[nammy]

Answer: A- Higher Taxation
Reason: through lowering the money supply in the economy, inflation rate can be reduced and this can be indirectly done through increased taxation because people will be left with lesser money than before; reducing the growth of aggregate demand reduces inflationary pressures.

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