ECONOMICS
AGGREGATE DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Increase government spending
|
|
|
Print more money
|
|
|
Raise taxes
|
|
|
Issue stimulus checks
|
|
|
Raise interest rates
|
Detailed explanation-1: -For example, a central bank might increase interest rates to counter demand-pull inflation, leading consumers to spend less on housing and products. This in turn lowers demand, allowing producers to catch up with supply and restoring balance. Governments can also reduce government spending or raise taxes.
Detailed explanation-2: -Monetary Policy Measures Similar process follows when CRR, SLR, Repo Rates are increased and decreased. Rates like CRR, SLR, Repo Rate and Reverse Repo Rate are increased to impact the money supply in the economy by the RBI to control inflation.
Detailed explanation-3: -Demand-pull inflation is a tenet of Keynesian economics that describes the effects of an imbalance in aggregate supply and demand. When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up. This is the most common cause of inflation.
Detailed explanation-4: -Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.