Question

explain the two major methods to control price rise. class 10 sst​

Answer 1

Answer:

The following steps have been taken to control price rise.

(i) Monetary Measures: The Reserve Bank of India takes the following monetary measures to control price rise:

It increases the Bank rate; i.e, the rate at which it lends money to the commercial banks. As a corollary, the commercial banks increase the rate of interest while lending money to their customers. The increase in the interest rate curbs the tendency to borrow money and invest the same in speculative ventures.

The increase in the rate of interest on the deposits encourages the consumers to invest their surplus funds. Thereby surplus funds go out of circulation. The tendency to make unnecessary purchases is curbed. This reduces the demand for the goods. The Reserve Bank withdraws surplus funds from the market by selling the government securities. It increases the Cash Reserve Ration and reduces the availability of funds with the commercial banks.

(ii) Fiscal Measures are taken by the government to control price rise. These are: The government reduces the public expenditure, postpones plans involving heavy expenditure and curbs wasteful expenditure. It increases the level of existing taxes and imposes new taxes and thereby reduces spending capacity of the people. It borrows money from the market, private individuals and institutions. Thereby, it curtails excess purchasing power and demand for goods and services.

Answer 2

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