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During inflation, the appropriate fiscal measure to adopt is to

Economics
WAEC 2020

During inflation, the appropriate fiscal measure to adopt is to

  • A. increase indirect taxes
  • B. increase direct taxes
  • C. reduce personal income tax
  • D. increase government expenditure
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Correct Answer: Option B
Explanation

In fiscal policy, the government controls inflation either by reducing private spending or by decreasing government expenditure, or using both.

It reduces private spending by increasing taxes on private businesses. When private spending is more, the government reduces its expenditure to control inflation. The tax system should provide larger incentives to those who save, invest, and produce more.


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WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
WAEC offline past questions - with all answers and explanations in one app - Download for free
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
WAEC Past Questions, Objective & Theory, Study 100% offline, Download app now - 24709
WAEC offline past questions - with all answers and explanations in one app - Download for free
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts