Social Science · Monetary and Fiscal Policies
If CPI inflation runs high primarily due to excessive liquidity and high credit growth, which combination of Monetary and Fiscal Policy is most effective to control this Demand-Pull Inflationary pressure, and what is its intermediate target?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Monetary Policy: Introduce Open Market Operations (OMO) sales; Fiscal Policy: Reduce personal income tax; Intermediate Target: Increase supply.
- 2Monetary Policy: Increase Repo Rate; Fiscal Policy: Reduce government expenditure and increase taxes; Intermediate Target: Reduce Aggregate Demand.✓
- 3Monetary Policy: Reduce Repo Rate; Fiscal Policy: Reduce corporate taxes; Intermediate Target: Increase investment.
- 4Monetary Policy: Reduce Statutory Liquidity Ratio (SLR); Fiscal Policy: Increase capital expenditure; Intermediate Target: Increase money supply.
Correct answer
Monetary Policy: Increase Repo Rate; Fiscal Policy: Reduce government expenditure and increase taxes; Intermediate Target: Reduce Aggregate Demand.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Social Science?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Monetary and Fiscal Policies MCQs →Want more practice questions on Monetary and Fiscal Policies?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Social Science · Monetary and Fiscal Policies