A developing economy, Country Gamma, is grappling with a rapidly expanding money supply which policymakers believe is fueling significant demand-pull inflation. The government is considering implementing policies to curb this inflationary pressure. Which of the following tools would be LEAST effective as a monetary policy tool in reducing demand-pull inflation in Country Gamma, assuming all other economic factors remain constant?

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Economics · Monetary Policy

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Reducing direct taxation on household incomes.

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Increasing the central bank's benchmark interest rate.

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