What is Cost-Push Inflation?

A situation where demand for goods exceeds supply.

A situation where the cost of production of goods increases.

A situation where the central bank increases interest rates.

A situation where government expenditure decreases.

A decline in the general price level of goods and services.

A sustained increase in the general price level of goods and services.

A reduction in the money supply in the economy.

An increase in the interest rates set by commercial banks.

What is the main cause of demand-pull inflation?

Rise in the cost of factors of production.

Increase in government expenditure.

Fluctuation in output and supply.

Which monetary policy tool is used by the central bank to control inflation by reducing the volume of credit in the economy?

Statutory Liquidity Ratio (SLR)

How does an increase in Bank-Rate affect the economy during inflation?

It increases government spending.

It encourages borrowing and investment.

It makes borrowing money more expensive.

What is the primary objective of fiscal policy during inflation?

To increase government expenditure.

To encourage borrowing and investment.

What is the purpose of Open Market Operations in monetary policy?

To increase government spending.

To reduce government borrowing.

To control the money supply in the economy.

To increase bank interest rates.

How does a reduction in public expenditure contribute to controlling inflation?

It increases disposable income.

It boosts production and supply.

It reduces overall demand in the economy.

How does a progressive direct tax contribute to controlling inflation?

It increases government revenue.

What measure should be taken to control inflation without reducing production capacity?

Increase in government expenditure.

Rationalization of excise duties.

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