ECONOMICS (CBSE/UGC NET)

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: -To counter demand pull inflation, governments, and central banks would have to implement a tight monetary and fiscal policy. Examples include increasing the interest rate or lowering government spending or raising taxes. An increase in the interest rate would make consumers spend less on durable goods and housing.

Detailed explanation-3: -Typically, inflation goes hand-in-hand with economic growth, and an overheated economy is one possible cause of higher inflation. Conversely, recessions typically cause inflation to slow.

Detailed explanation-4: -Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.