What should the government opt for?
Quantitative Finance
Level
2
When a socialist economy is struck with hyper inflation, then which of the following steps should the government take to decrease it?
Check out the set Quantitative Finance questions
Decrease the bank rate
Insufficient information
Increase the bank rate
Let the bank rate remain as it is
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1 solution
In order to decrease the inflation, the government should increase the bank rate because then the rate at which the central bank provodes loans to the commercial bank increases, due to which the flow of money in the entire economy inhibits and thus inflation gradually diminishes.