Read the following Statements carefully and answer the question that follows:

Statement (I): Controlling Wages is a measure to control Inflation
Statement (II): Increasing Wages is a measure to control Inflation
Statement (III): Increasing rates of interest on Bank deposits is a measure to control Inflation
Statement (IV): Increasing spending on infrastructural development is a measure to control Supply side Inflation

Choose the correct option from the following:

Statements (I), (III) and (IV) are all correct but Statement (II) is incorrect

The correct answer is Option (2) → Statements (I), (III) and (IV) are all correct but Statement (II) is incorrect

Statement (I): Controlling Wages is a measure to control Inflation (Correct) Capping or controlling wage growth helps prevent a "wage-price spiral," where higher wages lead to higher production costs and increased consumer demand, both of which drive prices up.

Statement (II): Increasing Wages is a measure to control Inflation (Incorrect) Increasing wages generally contributes to inflation. It increases the disposable income of consumers (demand-pull inflation) and increases the cost of production for firms (cost-push inflation).

Statement (III): Increasing rates of interest on Bank deposits is a measure to control Inflation (Correct) Higher interest rates encourage people to save money in banks rather than spend it. This reduces the liquidity (money supply) in the market, thereby cooling down demand and lowering inflation.

Statement (IV): Increasing spending on infrastructural development is a measure to control Supply-side Inflation (Correct) Supply-side inflation occurs when the cost of production rises or supply is constrained. Investing in infrastructure (like better roads, ports, or power) improves efficiency and reduces long-term production and transportation costs, which helps stabilize prices from the supply side.