Through what measures can the government curb inflation______________?
Show answer Hide answer
Answer: B. Increasing supply of goods
Explanation
Increasing the supply of goods helps satisfy excess market demand and lowers general price levels. Greater product availability reduces scarcity pressures that typically drive up inflation in the economy. Expanding domestic production capacity allows markets to absorb purchasing power without sparking inflationary spirals. Inflation reflects a general increase in prices and a subsequent fall in the purchasing value of money. Cost-push and demand-pull inflation can both be mitigated by boosting the overall availability of commodities. Supply-side economic policies focus on deregulation and productivity improvements to increase output quantities.
Central banks and governments coordinate policies to encourage agricultural and industrial production during inflationary periods. Reducing supply bottlenecks in shipping and manufacturing helps stabilize consumer prices globally. Policymakers use trade liberalisation to import goods and increase local market supply when domestic shortages occur. Increasing demand for goods exacerbates scarcity and pushes consumer prices even higher during inflation. Expanding the money supply fuels inflation by putting more purchasing power into circulation without extra goods. Decreasing taxes typically increases disposable income and aggregate demand, which can worsen inflationary pressures.
Related questions
Q1. Which region in Pakistan exhibits the highest population density?
Show answer Hide answer
Answer: C. Islamabad
Islamabad functions as a compact federal capital territory with highly concentrated urban infrastructure. The concentrated municipal layout results in a significantly higher population density than surrounding provinces....
Q2. What economic variables are assumed to be identical across countries in the Heckscher-Ohlin model?
Show answer Hide answer
Answer: D. Both A and B
The standard Heckscher-Ohlin model relies on several simplifying assumptions to isolate trade drivers. It explicitly assumes that consumer tastes and production technologies are identical everywhere. These assumptions en...
Q3. What defines the golden-rule rate of saving?
Show answer Hide answer
Answer: C. maximizes the level of long-run consumption
The golden rule rate of saving identifies the steady state where per capita consumption reaches its peak. Higher savings rates beyond this point dedicate too much output to capital accumulation rather than enjoyment. Max...
Q4. To what are the gains derived from international trade primarily connected?
Show answer Hide answer
Answer: B. How much the autarky price differs from international terms of trade change
International trade gains depend on how much domestic autarky prices diverge from world market prices. Greater price differences create larger arbitrage and specialization opportunities for trading partner nations. Count...
Q5. What classical trade model assumption does the Heckscher-Ohlin framework modify by treating _________ as identical across nations?
Show answer Hide answer
Answer: C. technology
The Heckscher-Ohlin framework modifies classical Ricardian trade theory assumptions. It departs from Ricardo by treating production technology as identical across all nations. This shift places the entire explanation of...
Q6. Which high-grade coal features a lustrous surface and the maximum calorific value?
Show answer Hide answer
Answer: D. Anthracite
Anthracite is classified as the highest grade of coal due to its metamorphic formation process. It features a high carbon content and a lustrous surface that distinguishes it from lesser coals. Maximum calorific value me...