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Explain four statutory measures the government would take to control the impact of inflation. (b). Using a well labeled diagram, explain the effects of fixing price...

      

Explain four statutory measures the government would take to control the impact of inflation.
(b). Using a well labeled diagram, explain the effects of fixing price above and below the
equilibrium price.

  

Answers


gideon
i. Price control-The government may decide to control the price of essential commodities. This
measure can only succeed if the government offers subsidy to the producers. This would cover the
differences between the government set price for the commodity.
ii. Wage price indication-The government can instruct employers to ensure that wage are regularly
adjusted to keep pace with the increase in inflating rate.
iii. Government participation in business-The government could participate in production thought
the state corporation this could rain output and therefore help in controlling inflation originating
from supply side factors. The government could concentrate more on production of essential goods
and other commodities that private sector may find unprofitable to produce.
iv. Rationing of commodities-The government could ration a scarce commodity. This could involve
the setting of a specific maximum quality that each person can purchase per given period.
However the measure would not be effective in liberalized market economy
gideon1 answered the question on November 2, 2017 at 06:04


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