Question
An appropriate fiscal policy for severe demand-pull inflation is
Multiple Choice
an increase in government spending.
depreciation of the dollar.
a reduction in interest rates.
a tax rate increase.
Multiple Choice
an increase in government spending.
depreciation of the dollar.
a reduction in interest rates.
a tax rate increase.
Answers
GPT-4o mini
An appropriate fiscal policy for severe demand-pull inflation is **a tax rate increase**.
Increasing taxes can help reduce disposable income for consumers, thereby decreasing demand for goods and services, which can help mitigate inflationary pressures.
Increasing taxes can help reduce disposable income for consumers, thereby decreasing demand for goods and services, which can help mitigate inflationary pressures.