Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

What should be government's strategy is case of a "Hyper-inflation" situation?

Options:

Should adopt a balanced budget

Should adopt a deficit budget

Should adopt a surplus budget

None of the above

Correct Answer:

Should adopt a surplus budget

Explanation:

Hyper-inflation is a situation when there is increased money supply in the economy. In order to reduce it, the government spending should be reduced. Hence, adoption of a surplus budget is required.