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WAEC Economics 1999 Question 23

Question 23

Money and Inflation

Deflation can be controlled by increase in

  1. A.the bank rate
  2. B.income tax
  3. C.the price level
  4. D.the budget deficit
Show the answer and explanation

Answer: D (the budget deficit)

Explanation

Deflation is a persistent fall in prices due to low demand; a bigger budget deficit (more government spending or lower taxes) raises demand.