Economic Awareness - Sectors of Indian Economy
Which of the following statements correctly distinguishes between demand-pull and cost-push inflation control measures?
Which of the following statements correctly distinguishes between demand-pull and cost-push inflation control measures?
hard Q9 of 15
Step-by-Step Solution
Step 1: Understand types of inflation
Demand-pull inflation arises from excess demand; cost-push inflation arises from rising production costs.Step 2: Match control measures
Monetary tightening (like increasing repo rate) reduces demand, controlling demand-pull inflation; administrative measures (price controls, subsidies) address supply-side cost increases, controlling cost-push inflation.Step 3: Eliminate incorrect options
Price controls are administrative, not primary for demand-pull; fiscal policy alone cannot control both types; reducing taxes or increasing subsidies generally increase demand, worsening inflation.Final Answer:
Demand-pull inflation is controlled by monetary tightening; cost-push by administrative measures → Option AQuick Check:
Demand-pull = Monetary tightening; Cost-push = Administrative ✅
Quick Trick: Monetary tools for demand-pull; administrative for cost-push
Common Mistakes:
- Confusing price controls as demand-pull control
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