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JAMB Economics 1986 Question 31

Question 31

Money and Inflation

To control inflation, the monetary authorities of a country can

  1. A.reduce taxes
  2. B.advise government to increase its expenditure
  3. C.engage in expansive monetary policy
  4. D.engage in restrictive monetary policy.
Show the answer and explanation

Answer: D (engage in restrictive monetary policy.)

Explanation

Inflation is fought by reducing the money supply and credit, which is a restrictive (tight) monetary policy.