Which of the following is a possible cure for ongoing inflation?
A) The Fed could pursue anti-cyclical monetary policy.
B) The Fed could increase money supply whenever the AD curve shifts to the right.
C) The Fed could maintain a constant interest rate target regardless of economic circumstances.
D) The Fed could always try to keep the unemployment rate below the natural rate.
E) The Fed could pursue anti-cyclical fiscal policy.

Question

Quizplus · Accepted Answer

Pursuing anti-cyclical monetary policy, such as increasing interest rates during periods of high inflation, can help decrease demand and decrease inflation rates. The other options are either ineffective or could potentially contribute to further inflation.

Which of the Following Is a Possible Cure for Ongoing