how to control deflation

Control of Deflation

  • Reduction in Taxation: The government should reduce the amount and burden of various taxes levied on commodities. This will increase the purchasing power of the people. As a result, the demand for goods and services will increase. Moreover, sufficient tax relief should be given to businessmen to encourage investment.
  • Redistribution of Income: Marginal propensity to consume can be raised by a redistribution of income and wealth from the rich to the poor. Since the marginal propensity to consume of the poor is high and that of the rich is low, such a measure will help in increasing the aggregate demand in the economy.
  • Deficit Financing: In order to have significant expansionary effects, the government’s public works schemes should be financed by the method of deficit financing. The government should adopt a budgetary deficit (excess of government expenditure over its revenue) and cover this deficit through deficit financing. Deficit financing makes sufficient resources for developmental programmes available to the government without adversely affecting investment in the private sector.
  • Reduction in Interest Rate: By adopting a cheap money policy, the monetary authority of a country reduces the interest rate which stimulates investment and thereby, expands economic activity.
  • Foreign Trade Policy: To control deflation, the government should adopt such a foreign trade policy that, on one hand, increases exports and, on the other hand, reduces imports. This kind of policy will go a long way in solving the problem of overproduction and help in overcoming deflation.

Comments

Post a Comment

Popular posts from this blog

spreadsheet in excel

Image
What is a Spreadsheet A spreadsheet is a file that exists of cells in rows and columns and can help arrange, calculate and sort data. Data in a spreadsheet can be numeric values, as well as text,  formulas ,  references  and  functions . Rows, columns and cells in a spreadsheet The rows in a spreadsheet have numeric names (1, 2, 3 etc) and the columns have alphabetic names (a, b, c etc), thus the names of cells subsequently exist of a letter and a number that conveniently point out their position in the grid Selection of a row In the image above row 3 is selected. This can be done by clicking on the number 3 in front of the row. Selection of a column In the image above column B is selected. This can be done by clicking on the letter B above the column. Selection of a cell In the image above cell B3 is selected. This can be done by clicking on the cell. Worksheets A spreadsheet can contain one or several worksheets (tabs). Adding worksheets can be done by clicking the...
Read more

vocab

Image
       Meaning vocabulary is a term that describes how people learn the meaning of words. Children can learn the meanings of words by using context clues, word part instruction and graphic organizers. Meaning vocabulary entails words for which their meanings are understood and it is an important component of comprehension. Direct instruction in meaning vocabulary is essential. If vocabulary is not developed, children will be unprepared to handle vocabulary demands of content-area subjects. Its significance is also displayed in comprehension and interaction with others. Meaning vocabulary helps to build social skills, confidence and self-esteem in children. It also enables children to use context clues to decipher word meaning. It helps children to construct more interesting stories and to communicate effectively with their peers and just about anyone with whom they interact. The more words they know, the more aptly they will be able to communi...
Read more

Image
The Gds Vocabulary For All Competitive Exams | daily update 08/06/2022(Wednesday -09:05 pm) 📰 1. UNRAVEL (VERB): : solve Synonyms:  resolve, work out Antonyms:  complicate Example Sentence: They were attempting to unravel the cause of death. 2. NURTURE (VERB): : bring up Synonyms:  take care of, look after Antonyms:  neglect Example Sentence: I was nurtured by his parents in a close-knit family. 3. MALIGNANT (ADJECTIVE): : spiteful Synonyms:  hostile, malevolent Antonyms : benevolent Example Sentence: He is now in the hands of malignant fate. 4.RAMSHACKLE (ADJECTIVE): : tumbledown Synonyms:  dilapidated, derelict Antonyms:  well maintained, sturdy Example Sentence: It has a slightly ramshackle atmosphere, which adds to the charm 5. SPARK (VERB): : cause Synonyms:  give rise to, set in motion Antonyms:  bring to an end Example Sentence: The meeting sparked a row of rumours. 6. EQUITABLE (ADJECTIVE): : fair Synony...
Read more