Measures by the Government

Q.

How does a country control inflation?

Q. The government often imposes high taxes so that the people purchase less. Why does it do so?

1. To increase its revenue
2. To store goods for future use
3. To make the room for developmental projects
4. To control excess money in the economy

Q. Explain some of the ways in which the RBI regulates the banks.

Q. The Indian economy experienced a great inflation in the past few years.

What could the RBI do to control this situation in the country?

1. The RBI could decrease the money circulation in the economy.
2. The RBI could increase the money supply in the economy.
3. The RBI could decrease the interest rates on loans.
4. The RBI could decrease the interest rates on deposits in banks.

Q. The government controls inflation by regulating which policy?

1. Public distribution system
2. Import-export policy
3. Rate of interest on loans
4. Repo rate policy

Q. Which of the following measures does the RBI take to regulate money in the economy?

1. Controls the rate of interest on loans and savings
2. Asks citizens for money
3. Imposes high taxes
4. Asks loans from citizens

Q. A lot of people in India prefer rich coffee because of which there is a shortage in the country. The government asks Brazil for help. How is the government able to do so?

1. By imposing high taxes
2. By curbing money supply
3. By regulating import-export policies
4. By asking people not to consume coffee

Q. Mike enjoys a monopoly in shoe manufacturing in a particular region and falls into a situation where the demand for goods and services falls.

What advice would you give him as his financial advisor?

1. To manufacture more shoes
2. To manufacture less shoes
3. To quit the business
4. To set up more shops

Q.

What is the current rate of CRR in the Indian Economy?

Q. The RBI the money supply during inflation.

1. does not decrease
2. decreases
3. does not increase
4. increases