How do RBI or government control inflation in market
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Rbi can control inflation through monetary policy. inflation occurs when supply of money increases n value of money decreases as a result price increases this situation is known as inflation I. e mahngai. where general prices of goods n services are increase. monetry authority adapt some quantitative measure like bank rate policy, cash Reserve ratio, statutory liquidity ratio n open market situation etc.
in other words inflation can be define when situation of excess demand greater than supply this situation is known as demand pull inflation.
finally we can say that govt increase or decrease money supply to balanced economic stability. govt reduce money supply to check inflation.
Rbi can control inflation through monetary policy. inflation occurs when supply of money increases n value of money decreases as a result price increases this situation is known as inflation I. e mahngai. where general prices of goods n services are increase. monetry authority adapt some quantitative measure like bank rate policy, cash Reserve ratio, statutory liquidity ratio n open market situation etc.
in other words inflation can be define when situation of excess demand greater than supply this situation is known as demand pull inflation.
finally we can say that govt increase or decrease money supply to balanced economic stability. govt reduce money supply to check inflation.
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