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Which of the following measures will increase inflation rather than taming it?
1. Curb hoarding of essential items
2. Contractionary Monetary policy
3. Import of Specific goods
4. Liberal fiscal policy
Select the correct answer using the codes below.
3 and 4 only
1, 2 and 3 only
4 only
2 and 3 only
Statement 1 and 3: It is common in the case of onion, pulses etc. where government often cracks down on illegal hoarding to increase market supply, and at times imports pulses to increase their domestic supply so that prices can be reduced.
Statement 2: Tight monetary policy is basically intended to cut down the money supply in the economy by siphoning out the extra money from the economy, so that effective demand is reduced.
This is a short-term measure. In the long-run, the best way is to increase production with the help of the best production practices.
Statement 4: Loose fiscal policy only increases the liquidity and pushes demand thereby raising inflation.
By: Pradeep Kumar ProfileResourcesReport error
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