Price control and rationing are direct control measures to check __________.
- A.reflation
- B.disinflation
- C.deflation
- D.inflation
Show answer
Correct answer: D. inflation
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.