question_answer

Explain how the fiscal measures and the Public Distribution System help in controlling price rise.                                [AI 2006C, 04]

Answer:

Fiscal Measures: When government decides to reduce the money in circulation, it imposes taxes on higher-income groups and on money consumable goods. On the other hand, government can also decide to reduce expenditure on buildings, roads and bridges, etc. The intention of the government here is to reduce the purchasing capacity of the people. When people have less money to spend, their consumption will also fall which leads to decline in prices.

Public Distribution System : Refer to answer no. 1 above.