WAEC Economics 2011 Objective — Question 34

Question 34 of 50 from the West African Examinations Council (WAEC) Economics 2011 Objective paper, with the correct answer and a full explanation.

The best way of combating demand-pull inflation is to

A. A. increase income taxesCorrect
B. B. reduce income taxes
C. C. increase import duties
D. D. increase government expenditure

Explanation

Increase in income tax will reduce the disposable income. Since demand pull inflation is as a result of excessive demand, reduction in disposable income will lead to a fall in demand and inflation will be checked.

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