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Economics · 2025 · 4 marks
CBSE 2025 · Region 4 · Set 1 · Q15
Read the following text carefully: According to a report issued by a research organisation, there is a sharp decline in the overall demand in the…
Read the following text carefully :
According to a report issued by a research organisation, there is a sharp decline in the overall demand in the economy, particularly in the private consumption segment. This dip in the macro economic variables, highlights the urgent need for strategic actions to stimulate economic activities.
On the basis of the given text and common understanding, explain the measure which the government may take to solve the indicated problem.
Marking-scheme solution
The highlighted issue is deflation. To control deflation, the government may:
decrease the tax rates which 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 correcting the situation of deflation.
increase the public expenditure which may increase the level of income in the economy. Consequently, it may lead to a rise in Aggregate Demand, thereby correcting the situation of deflation.
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CBSE Class 12 Economics past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.