To prevent demand-pull inflation
A) firms must refuse to increase wages.
B) the Fed must not let the quantity of money persistently rise.
C) the natural unemployment rate must increase.
D) real GDP must increase.

Question

Quizplus · Accepted Answer

To prevent demand-pull inflation, it's essential to control the amount of money circulating in the economy. If the Federal Reserve (the Fed) allows the quantity of money to increase persistently, it can lead to too much money chasing too few goods, causing prices to rise. Hence, controlling the money supply is a key measure to prevent demand-pull inflation.

To Prevent Demand-Pull Inflation