State with reasons whether you agree or disagree with the following st

1.	State with reasons whether you agree or disagree with the following statement:During the period of inflation, surplus budget is advisable.
Answer» Yes, I agree with this statement. During inflationary period, price of commodities rises rapidly. This rise in price can be controlled by lowering the level of effective demand in the economy. This can be done by increasing taxes which will automatically reduce the purchasing power of the people, which will result in fall of aggregate demand. The fall in aggregate demand will lead producers and sellers to reduce the price of l their products to increase their sale. Thus, inflationary pressure is controlled by adopting surplus budget.

State with reasons whether you agree or disagree with the following statement:During the period of inflation, surplus budget is advisable.

Answer»

Yes, I agree with this statement.

During inflationary period, price of commodities rises rapidly.

This rise in price can be controlled by lowering the level of effective demand in the economy. This can be done by increasing taxes which will automatically reduce the purchasing power of the people, which will result in fall of aggregate demand.

The fall in aggregate demand will lead producers and sellers to reduce the price of l their products to increase their sale. Thus, inflationary pressure is controlled by adopting surplus budget.

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