ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In particular, one study by the St. Louis Federal Reserve found that government spending has little to no impact on inflation. In fact, a 10% increase in government spending may lead to a 0.08% decline in inflation.

Detailed explanation-2: -The Government controls its spending when the expenditure from the private side is high. Governments can reduce private spending by increasing taxes. This is one of the fiscal policies of the Governments to control inflation.

Detailed explanation-3: -An increase in government spending is one of the factors that economists say can drive inflation. Other factors include interest rates, monetary policy, supply chain disruptions and fluctuations in demand for goods and services. Inflation can be an important consideration for investing, saving and borrowing.

Detailed explanation-4: -Deflation occurs when the overall level of prices in an economy declines and the purchasing power of currency increases. It can be driven by growth in productivity and the abundance of goods and services, by a decrease in aggregate demand, or by a decline in the supply of money and credit.