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Which of the following statements is correct with respect to the correction of Excess Demand?
Government reduces the taxes.
Government reduces its expenditure.
The Central Bank reduces bank rates.
The Central Bank sells securities from the Open Market.
Option (2) is correct. Explanation: Decrease in Government spending will reduce the level of aggregate demand in the economy and will help to correct inflationary pressures in the economy.
By: Parvesh Mehta ProfileResourcesReport error
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