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WAEC Economics 2010 Question 34

Question 34

Money and Inflation

The best way of combating demand-pull inflation is to

  1. A.increase income taxes.
  2. B.reduce income taxes.
  3. C.increase import duties.
  4. D.increase salaries and wages.
Show the answer and explanation

Answer: A (increase income taxes.)

Explanation

Higher income taxes cut disposable income and therefore excess demand.