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• Increase in wages leads to increase in disposable income of people which will lead to increase in demand and consequent increase in inflation. Hence, A is incorrect. • Decrease in taxes leads to increase in disposable income of people as now they need to pay less taxes which will lead to increase in demand and consequent increase in inflation. Hence, B is incorrect. • Reduction in public expenditure leads to decrease in income of people as now they will have less source of income which they were getting earlier, e.g., MGNREGA wages. This will lead to decrease in demand and consequent decrease in inflation. Hence, C is correct. • Making INR dearer means there is a high demand of INR. When demand is high then people will demand more to spend more and that will lead to increase in inflation. Hence, D is incorrect. • Therefore, C is the right answer.
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