Question

(2) Analyse main two measures for controlling price rise.

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Answer 1

Answer:

There are two main components of these fiscal measures to control inflation. One is the reduction of private spending (which increases government revenue) and the other is the reduction in government spending or expenditure.

Some of the steps the government may take to check inflation are as follows,

Increase the bank rate. This makes loans and advances more expensive for the common public. And so they will spend less money on goods and commodities.

Employ other such open market operations to reduce the level of liquidity in the economy

The RBI also changes its Cash Reserve Ratio, as a tool to control the amount of money and credit in the market.

Explanation:

steps to control price rise:

1)Monetary Measures

2)Fiscal Measures

3)Price Control.

hope you understand ..