Question

If the economy is in an inflationary boom, appropriate policies to pursue may include:

a) Increasing interest rates
b) Decreasing interest rates
c) Maintaining current interest rates
d) Ignoring the situation

Answer 1

If the economy is in an inflationary boom, appropriate policies to pursue may include increasing interest rates.

Step-by-step explanation:

If the economy is in an inflationary boom, appropriate policies to pursue may include increasing interest rates.

When an economy is experiencing inflation, increasing interest rates can help reduce aggregate demand, as higher interest rates make borrowing more expensive and discourage spending.

This can help slow down price increases and stabilize the economy.