Question

Which of the following methods is used to control inflation in India?

A Welfare Schemes by Government of India only Correct Answer Incorrect Answer
B National Banks increase interest rates Correct Answer Incorrect Answer
C Decreased money circulation Correct Answer Incorrect Answer
D Increased money circulation Correct Answer Incorrect Answer

Solution

Inflation is closely related to interest rates, which can influence exchange rates. When inflation is high, RBI will increaseinterestrates inordertobringinflationbackintoanacceptablerange. As a result money circulation is reduced in the economy.

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