Indian Economy

With reference to inflation in India, Which of the following statements is correct?

  1. Controlling the inflation in India is the responsibility of the Government of India only
  2. The Reserve Bank of India has no role in controlling the inflation
  3. Decreased money circulation helps in controlling the inflation
  4. Increased money circulation helps in controlling the inflation

Answer

Decreasing the money circulation decreases the demand of goods and services, which helps in controlling the inflation. It is mainly effective for demand pull inflation.

The correct option is C.