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Economics · 2022 · 3 marks
CBSE 2022 · Region 2 · Set 1 · Q9
Define Inflationary Gap. State, how the government can control the situation of inflationary gap, using the taxation policy.
Marking-scheme solution
Inflationary gap refers to the situation when Aggregate Demand is greater than Aggregate Supply, corresponding to full employment level of output.
The government may raise the existing taxes rates/levy new taxes to reduce the disposable income in the hands of general public. This will help to manage inflationary situation in the economy.
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CBSE Class 12 Economics past-paper question from the 2022board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.