Measures to Correct Cost Push Inflation

  • Provision of subsidies:-The government can help to reduce the cost of production by giving producers assistance in form of subsidies.
  • Increased availability of goods:- This can be achieved in the following ways.
  • Increased local production of goods and services.
  • Increased importation of goods that are lacking.
  • Reduced exportation of goods that are in short supply in the economy.
  • Price Policy:- The government institutes price controls by fixing maximum prices for the essential goods.
  • Income Policy:-The government sets a maximum wage which is followed by wage freeze in order to reduce the rising wage rate in the economy.
  • Organization control:-The government takes over the distribution outlets and practices rationing so that every consumer gets an opportunity to buy the commodity.
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