Inflation Trends

Economic and social issues(Phase-I/II)

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Indian Economy - Understanding the basics of Indian economic system

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Which of the following situations contribute to cause the Inflation situation in an economy?

1.Demand-supply gap

2.Excess circulation of money

3.Increase in increase tax rates

1 only

1 and 2 only

2 and 3 only

1 and 3 only

Explanation:

The government can increase taxes (such as income tax and VAT) and cut spending. This improves the government’s budget situation and helps to reduce demand in the economy.

By: Barka Mirza

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