Which of the following policies would decrease demand-pull inflation?
a. An increase in excess reserves.
b. The FED buying government securities.
c. Incomes policies.
d. A reduction in resource prices.
SOLUTION This solution is FREE courtesy of BrainMass!
Demand-pull inflation occurs when aggregate demand in an economy is greater than aggregate supply.
a. An increase in excess reserves will further worsen the inflation.
b. The FED buying government securities will have little impact on demand-pull inflation.
c. Incomes policies would have tremendous impact on demand-pull inflation. Reduction in consumers' income would discourage consumers to buy and therefore reduce demand pull inflation.
d. A reduction in resource prices would encourage consumers to buy more due to lower prices.© BrainMass Inc. brainmass.com December 24, 2021, 10:09 pm ad1c9bdddf>