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      Question

      Which of the following may be the probable action by

      the Government to reduce inflation .
      A Cuts in government spending Correct Answer Incorrect Answer
      B Increase in government expenditure Correct Answer Incorrect Answer
      C Reduction in repo rate Correct Answer Incorrect Answer
      D Increase spending abroad Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      When government activities inject more capital into the economy, consumers have more to spend, which can increase demand. If suppliers fail to meet rising demand, they may hike prices, leading to inflation.

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