Question

During inflation, the level of aggregate demand can be reduced by

• A. Decreasing the level of taxation
• B. Increasing the level of public expenditure
• C. Decreasing the level of public expenditure
• D. Increasing the supply of commodities

Answer 1

The correct option is C

Decreasing the level of public expenditure

During inflation, the level of aggregate demand can be reduced by cutting the level of public expenditure. When public expenditure is cut, the income of the people will be reduced