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Q. |
Which of the following can be used for checking inflation temporarily? |
A. | Increase in wages |
B. | Decrease in money supply |
C. | Decrease in taxes |
D. | None of these |
Answer» B. Decrease in money supply | |
Explanation: An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India's Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation. |
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