2012 · Q7
Which of the following measures should be taken when an economy is going through inflationary pressures?
- 1The direct taxes should be increased.
- 2The interest rate should be reduced.
- 3The public spending should be increased.
Select the correct answer using the code given below:
General KnowledgeEconomics
- A1 only
- B2 only
- C2 and 3
- D1 and 2
Explanation
Raising direct taxes curbs aggregate demand and inflation; cutting interest rates or raising public spending would fuel inflation. Only 1.