The government imposes heavy taxes to discourage private consumption and introduces cuts in its expenditure during the time of

Depreciation

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Inflation

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Deflation

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Price decrease

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Solution

The correct option is B
Inflation

The government imposes heavy taxes to discourage private consumption and introduces cuts in its expenditure during the time of inflation. This helps in the diversion of resources from socially undesirable channels to the desirable channels.

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(I) Deflation is a decrease in the general price level of goods and services. It occurs when the inflation rate falls below 0%.

(II) Disinflation is the same phenomenon as deflation.

Q. To control inflation, the government can increase tax rates as it will decrease the people's purchasing power.

(a) Derive $N D P_{f c}$ from $G D P_{m p .}$

(b) Calculate gross fixed capital formation:

$N D P_{f c} = 5500$

Depreciation = 100

Private final consumption expenditure =1200

Government final consumption expenditure =1000

Net imports =700

Subsidies =40

Decrease in stock =-200

Find the Final Gross National Product at Market Price and Private Income:

$\begin{matrix} (Rs. in crores) (i) Private final consumption expenditure & 800 (ii) Net current transfers to abroad & 20 (iii) Net factor income to abroad & (-)10 (iv) Government final consumption expenditure & 300 (v) Net indirect tax & 150 (vi) Net domestic capital formation & 200 (vii) Current transfers from government & 40 (viii) Depreciation & 100 (ix) Net imports & 30 (x) Income accruing to government & 90 (ix) National debt interest & 50 \end{matrix}$

On which of the following products the government imposes heavy taxes by adopting differential commodity taxation?

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The government imposes heavy taxes to discourage private consumption and introduces cuts in its expenditure during the time of

The correct option is B Inflation The government imposes heavy taxes to discourage private consumption and introduces cuts in its expenditure during the time of inflation. This helps in the diversion of resources from socially undesirable channels to the desirable channels.

The correct option is B
Inflation

The government imposes heavy taxes to discourage private consumption and introduces cuts in its expenditure during the time of inflation. This helps in the diversion of resources from socially undesirable channels to the desirable channels.