Price control and rationing are direct control measures to check __________.
- A.reflation
- B.disinflation
- C.deflation
- D.inflation
Correct answer
Explanation
The correct answer is D, inflation. Inflation is a sustained rise in the general price level, measured in India by the CPI and the WPI. It is fought in three ways: monetary measures by the RBI such as raising the repo rate or CRR, fiscal measures such as higher taxes and lower government spending, and direct or administrative measures. Price control, rationing through the Public Distribution System and stock limits under the Essential Commodities Act 1955 are the direct measures: they cap what sellers may charge and how much each family may buy, so that scarce goods are shared and hoarding is checked. Option A is wrong because reflation is the deliberate effort to push prices and demand up after a slump, the opposite aim. Option B is wrong because disinflation is only a slowing of the inflation rate, not a problem that needs rationing. Option C is wrong because deflation is a fall in the general price level, when governments spend more rather than control prices. Exam tip: inflation = prices rise, deflation = prices fall, disinflation = prices rise more slowly, reflation = pushing prices up again.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
Show answer
The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
Show answer
GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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