Home PYQs UPPSC UPPSC MCQs Prelims 1996 (GS Paper I)

Question

Which one of the following is NOT a method to control inflation?

  1. Controlling the demand
  2. Controlling the supply of money
  3. Reducing the rate of interest
  4. Rationing of commodities

Answer:

Option C: Reducing the rate of interest

Detailed Solution:

The correct answer is “Reducing the rate of interest”.

Reducing the rate of interest typically stimulates borrowing and spending, which can increase aggregate demand and potentially worsen inflation. Therefore, lowering interest rates is generally not used to control inflation.