Question

Q13) Which one of the following is used to control inflation?
a) Decrease in credit expansion
b) Increase in taxation and compulsory savings
c) All of the above
d) None of the above​

Answer 1

Answer:

The most important and commonly used method to control inflation is monetary policy of the Central Bank. Most central banks use high interest rates as the traditional way to fight or prevent inflation.

Answer 2

Expansion permits borrowers to take care of loan specialists with cash worth not as much as when it was initially acquired, which benefits borrowers.

• Whenever expansion causes more exorbitant costs, the interest for credit increments, raising loan fees, which benefits banks.
• Expansion diminishes during downturns and increments during developments (recuperations). One more method for showing the impacts of jobless assets is with the creation prospects bend.
• Legislatures can utilize compensation and value controls to battle expansion, yet that can cause downturn and employment misfortunes.
• The public authority can increment charges, (for example, personal duty and VAT) and cut spending. This further develops the public authority's spending plan circumstance and assists with a diminishing interest in the economy. Both these approaches decrease expansion by lessening the development of total interest.
• States can likewise utilize a contractionary financial arrangement to battle expansion by diminishing the cash supply inside an economy using diminished security costs and expanded loan fees.