1. The direct taxes should be increased. |
2. The interest rate should be reduced. |
3. The public spending should be increased. |
A) Only 1
B) Only 2
C) 2 and 3
D) 1 and 2
Correct Answer: A
Solution :
Cost-push inflation occurs when businesses respond to rising costs, by increasing their prices to protect profit margins. There are many reasons why costs might rise: Component costs. Rising labour costs and higher indirect taxes imposed by the government. So, the direct taxes should be increased when an economy is going through inflationary pressures.You need to login to perform this action.
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