Q.

The process of curing inflation by reducing money supply is called -

A. Cost-push inflation
B. Demand-pull inflation
C. Disinflation
D. Reflation
Answer» C. Disinflation
Explanation: Disinflation is a decrease in the rate of inflation -a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over Lime. It is the opposite of reflation. Disinflation occurs when the increase in the "consumer price level" slows down from the previous period when the prices were rising. Disinflation is the reduction in the general price level in the economy but for a very short period of time. Disinflation takes place only when an economy is suffering from recession.
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