To stop a demand-pull inflation using monetary policy, you would recommend that the Fed
A) increase the quantity of money.
B) not increase the quantity of money.
C) increase tax rates.
D) purchase government bonds in the open market.

Question

Quizplus · Accepted Answer

To stop demand-pull inflation using monetary policy, the Fed would not increase the quantity of money. Increasing the money supply would further fuel inflation by increasing demand. The goal in this scenario is to reduce the money supply or keep it steady to curb inflation.

To Stop a Demand-Pull Inflation Using Monetary Policy, You Would