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13. How might deflation be stopped?

O Increases in the money supply
O Reduction in interest rates
O Fed must stimulate the economy with expansionary monetary policy
O all of the above

1 Answer

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D. All of the above

Increases in the money supply, reduction in interest rates, and expansionary monetary policy by the central bank can help stimulate demand, increase spending and investment, and encourage borrowing, which can help to counter deflationary pressures in the economy. By increasing the money supply, the central bank can make credit more available, which can stimulate spending and investment, and help to reduce the impact of deflation. Similarly, reducing interest rates can make borrowing more affordable and encourage people to spend more, which can also help to counter deflation.
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