How does the RBI control inflation and deflation in the economy?

By increasing loans

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Through fiscal policies

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Through monetary policies

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By reducing deposits

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Solution

The correct option is C Through monetary policies
Inflation refers to an increase in the general price level, while deflation means a decrease in the general price level. The RBI controls the price of goods and services through certain measures called the monetary policy. It regulates the money supply in the economy and controls the people’s capacity to spend.

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