Theory question 106
Money and InflationSection B
What is inflation? What efforts have been made by the government to combat inflation in Nigeria?
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Inflation: a persistent and general rise in the price level, which reduces the value (purchasing power) of money.
Government efforts:
1. Monetary policy by the Central Bank: higher interest/bank rate, open market sales of securities, higher reserve and liquidity ratios, credit ceilings, selective credit control.
2. Fiscal policy: cutting government spending, raising taxes, reducing budget deficits.
3. Price control and the Price Control Board.
4. Wage freezes / income policy.
5. Increasing production, e.g. Operation Feed the Nation, Green Revolution.
6. Importation of scarce goods and reduction of import duties on essential goods.
7. Improving distribution and checking hoarding.
Define, then explain measures.