Q. Which of the following is/are inflation controlling measures?
1. Supply side measures
2. Cost side measures 3. Easy monetary policy measures
Select the correct answer using the codes given below:

[A] 1 only

[B] 1 and 2 only

[C] 3 only

[D] 2 and 3 only

Answer: B

The governments resort to the following options to check rising inflation:

  • As a supply side measure, the government may go for import of goods which are in short-supply. As a long-term measure, governments go on to increase the production to matching the level of demand. Storage, transportation, distribution, hoarding are the other aspects of price manageme­nt of this category.
  • As a cost side measure, governments may try to cool down the price by cutting down the production cost of goods showing price rise with the help of tax breaks—cuts in the excise and custom duties.
  • The governments may take recourse to tighter monetary policy to cool down either the demand-pull or the cost-push inflations. This is basically intended to cut down the money supply in the economy by siphoning out the extra money.

Source: Source