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Give one measure to overcome a deflationary gap. - Economics

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Question

Give one measure to overcome a deflationary gap.

Answer in Brief

Solution

  1. The direct tax rate is to be reduced.
  2. The government can increase its expenditures.
  3. A policy of deficit financing can be followed.
  4. The central bank can reduce the bank rate, repo rate, CRR and SLR.
  5. The central bank can purchase government securities from the open market.
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