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Fiscal Policy and Taxation
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The transfer payments should be increased by the government at the time of
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A
deflation
💡 Explanation:
It is deflation.
At the time of deflation, purchasing power of people is reduced. Hence, at that time the supply of money in the hands of public must be increased like increase in old age pension, increase in unemployment compensation etc. Thus, people will demand more as money supply increases. This will boost the economy.