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17 July, 07:43

What statement is correct?

A) The money supply does not play a role in sustained inflation.

Eliminate

B) Inflation initiated by an increase in money supply is referred to as demand-pull inflation.

C) Inflation initiated by an increase in aggregate demand because of government spending is referred to as demand-pull inflation.

D) In order to avoid "crowding-out" after the government has increased government spending, the Fed often decreases the money supply in order to lower the interest rates.