What steps should be taken to tackle the situation of demand pull inflation?

1. Increase the taxes on the public.
2. Printing extra money.
3. Deficit Financing by the Government.

 

Select the correct answer using the code given below:
 

(A) 1 only
(B) 2 and 3 only
(C) 1 and 2 only
(D) 1, 2 and 3

Answer: Option A
 

Explanation:
To tackle the demand pull inflation, creation
of money should be reduced. 

So printing of Extra money and deficit financing by the
government should be avoided.

Increasing the taxes on the public will reduce the
purchasing power and it will help in tackling
the situation of demand pull inflation.
 

Demand-pull inflation
It is asserted to arise when aggregate
demand in an economy outpaces
aggregate supply.
It involves inflation rising as real
gross domestic product rises and
unemployment falls, as the economy
moves along the Phillips curve.