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
Correct Answer
D
Increased money circulation helps in controlling the inflation
Explanation
Decreased money circulation reduces aggregate demand and purchasing power in the economy, which directly helps in cooling down rising prices and controlling inflation. Option (a) is incorrect because inflation management is a joint responsibility of both the Government of India (fiscal policy) and the Reserve Bank of India (monetary policy). The core concept being tested is the relationship between **money supply and price stability**, specifically how contractionary monetary policy is used to curb inflation.
InflationInflation Control MeasuresInflationIndiamoney circulationReserve Bank of IndiaGovernment of Indiamonetary policyfiscal policy