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With reference to inflation in India, which of the following statements is correct?
(a) Controlling the inflation in India is the responsibility of the Government of India only
(b) The Reserve Bank of India has no role in controlling the inflation
(c) Decreased money circulation helps in controlling the inflation
(d) Increased money circulation helps in controlling the inflation



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Controlling inflation is a shared responsibility between the Government of India and the Reserve Bank of India (RBI). The government formulates and implements fiscal policies, such as taxation and government spending, to manage inflation. The RBI, as the central bank, implements monetary policies, including controlling the money supply and interest rates, to regulate inflation.

Decreased money circulation, often achieved through measures like reducing government spending or increasing interest rates, can help control inflation by reducing the overall demand for goods and services. This can help stabilize prices and mitigate inflationary pressures.

On the other hand, increased money circulation, such as excessive government spending or easy credit availability, can fuel inflationary pressures by increasing the demand for goods and services without a corresponding increase in supply.


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