It is clear that the inflationary situation in the long run is not going to help the economy to grow.
Methods Of Controlling
Inflation
Control Of Inflation:
It is clear that the inflationary
situation in the long run is not going to help the economy to grow. Therefore
the Government has to take many steps to overcome this problem. The given list
of measures was taken through monetary and fiscal policy of our country and is
explained in detail in the following chapters.
1.Monetary measures : to control inflation are:
Bank rate
Open
market operations
Higher
reserve ratio
Consumer
credit control
Higher
margin requirements
2.Fiscal measures:
Regulating
to Government expenditure
Taxation
Public
borrowing
Debt
management
Over
valuation of home currency
3.Others:
Wage
policy
Price control measures and rationing the essential supplies
Moral
suasion Anti Inflationary Measures:
The two important tools of macro
level economic policy are monetary policy and fiscal policy. The monetary
policy regulates the supply of money and availability of credit in the economy.
It deals with both the lending and borrowing rates of interest for commercial
banks. These two tools are used to control inflation and mitigate its severity. Monetary
measures: Since too much money is the
fundamental problem in the economy,
the central banking authorities use various instruments to reduce the money
supply and credit. Fiscal
measures: By adopting suitable measures in
taxation, public expenditure and
borrowing, the government can curb inflation. The following chapter discusses
these two measures in detail.
Tags : Managerial Economics - Inflation
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