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WAEC Economics 2004 Question 29

Question 29

Money and Inflation

Government can control inflation by

  1. A.printing more money
  2. B.reducing the rate of taxes
  3. C.reducing the level of expenditure
  4. D.establishing more banks
Show the answer and explanation

Answer: C (reducing the level of expenditure)

Explanation

Cutting government spending reduces aggregate demand and so reduces inflation.