McqMate
| Q. |
Inflation can be checked by - |
| A. | increasing exports |
| B. | increasing money supply |
| C. | increasing Government expenditure |
| D. | decreasing money supply |
| Answer» D. decreasing money supply | |
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Explanation: The technical and most often used way to control inflation is by tightening the money supply. The logic goes that when people do not have excess money, they will buy lesser quantity of goods and services and postpone luxurious expenses. This will reduce the demand for the products and thus lead to reduction in prices. Most central banks use high interest rates as the traditional way to fight or prevent inflation. |
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