UPSC CSE Prelims
Question 26
With reference to inflation in India, which of the following statements is correct?
View correct answer and explanation
Correct answer: C
Correct Option: C
Explanation: A reduction in excess money and credit growth can ease demand-pull inflation by curbing spending pressure; the RBI uses monetary-policy tools for this purpose.
Option-wise Analysis:
A: Incorrect - Inflation management is not the Union government’s responsibility alone.
B: Incorrect - RBI monetary policy plays a central role in controlling inflation.
C: Correct - Reducing excess money circulation can moderate aggregate demand and price pressure.
D: Incorrect - Increasing money circulation generally adds demand pressure rather than controlling inflation.