Which measure is adopted to reduce inflation? Cuts in government spen
A. Cuts in government spending
B. Reduction in Repo rate
C. Increase in government expenditure
D. Reduction in bank rate
Right Answer is: A
Cuts in government spending is adopted to reduce inflation.
• The government can increase taxes such as income tax and VAT and cut spending.
• This improves the budget situation and helps to reduce demand in the economy. Both these policies reduce inflation by reducing the growth of Aggregate Demand.