Skip to content

CA Foundation · Business Economics · Indian Economy

Which of the following is an example of a 'supply-side' measure to control inflation in India?

Reducing import duty on edible oils and pulses is a supply-side measure because it increases availability of goods and eases price pressure. Raising the repo rate or CRR works through monetary tightening of demand, and higher income tax is a fiscal demand-side tool, so those options are incorrect.

  1. ARaising the repo rate by the Reserve Bank of India
  2. BIncreasing the Cash Reserve Ratio of banks
  3. CReducing import duty on edible oils and pulses to increase their availabilityCorrect
  4. DIncreasing the rate of income tax on high earners

Explanation

Cutting import duty on edible oils and pulses raises domestic availability and eases prices, which is a supply-side step. Repo rate and CRR changes are monetary measures that curb demand through credit, and higher income tax is a fiscal demand-side measure.

Did you get it right without looking?

One question tells you little. A timed set on Indian Economy shows your real accuracy, how long you take and where you lose marks.

Practise Indian EconomyFree diagnostic mock

More Indian Economy questions