If supply is weak, demand is same. Remedy:
– Employ more resources in production of that particular commodity. Create better storage, efficient transportation, remove hoarding.
– For sudden relief, import the product in short supply.
– For agricultural growth, move toward best option available.
– Removing intermediaries and hoarders.
Cost of product are out of reach for a section of society. Remedy:
– Innovate. We used to have black and white screen mobile phone for more money compared to present era colored smart phone.
– Better production process to minimize waste and cheap energy use.
– Sudden relief can be Tax cuts, lower import duty etc.
Tight monetary policy:
Central bank giving costlier loan to banks (Higher repo rate)
Central bank requiring banks to keep more money as reserve (Increase in SLR & CRR)
Appropriate fiscal policy:
Some economist, focus on this measure too. Why should government waste so much money on social schemes to give freebies to poor, as it increase demand and bring inflation.
I and majority of other won’t agree to this. Every living being on this earth has same right over natural resources. There are many theories to prove this notion wrong. One we studied in last topic. That is more demand is always good for growth of economy.