At first cut,the simple solution to fighting inflation is
A)reducing the growth rate of the money supply.
B)limiting the number of terms that politicians can serve in elective office.
C)returning the economy to barter by prohibiting the use of fiat money.
D)to impose price controls on businesses that attempt to raise prices.

Question

Quizplus · Accepted Answer

Reducing the growth rate of the money supply is the simple solution to fighting inflation because inflation is caused by too much money chasing too few goods. By reducing the growth rate of the money supply, there will be less money available to buy those goods, leading to a decrease in demand and therefore, a decrease in prices. Limiting the number of terms politicians can serve in elective office or returning the economy to barter are not directly related to inflation, and imposing price controls can lead to shortages and black markets, creating more problems than solutions.

At First Cut,the Simple Solution to Fighting Inflation Is