Trivia: What is NOT an instigator of inflation?
Increased demand
Government spending
Rising wages
Interest rate hikes
The correct answer is Interest rate hikes
So why is this answer correct? : Inflation — the rate of price increases for goods and services — can be exacerbated by many things, such as increased demand, government spending, and rising wages. Raising interest rates, however, is a key tool used by the Federal Reserve to tame inflation. These increased rates mean it’s more expensive to borrow money, which lowers demand.