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Economics · 2023 · 4 marks
CBSE 2023 · Region 4 · Set 1 · Q14
Discuss briefly, how the government can control the situation of deflation using the following: (a) Taxation Policy (b) Government Expenditure Policy
Discuss briefly, how the government can control the situation of deflation using the following :
(a)
Taxation Policy
(b)
Government Expenditure Policy
Marking-scheme solution
(a)
Taxation Policy: To control deflation, the government may reduce the tax rates. This step may increase the disposable income (purchasing power) in the hands of the general public. Consequently, it may lead to a rise in Aggregate Demand, thereby controlling the situation of deflation.
(b)
Government Expenditure Policy: To control deflation, the government may raise public expenditure. This step may result in an increase in the level of Aggregate Demand in the economy by raising the income of people.
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CBSE Class 12 Economics past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.