The govt. can control inflation by______________?
Correct answer: B. Increasing supply of goods
- A. Increasing demand for goods
- B. Increasing supply of goods
- C. Increasing money supply
- D. Decreasing taxes
Explanation
Inflation can be reduced by increasing the supply of goods, because greater output helps meet demand and eases upward pressure on prices. Increasing money supply or reducing taxes generally raises aggregate demand and can worsen inflation.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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