BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When fiscal deficit is financed by borrowing from ____, it is called deficit financing or money creation.
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Reserve Bank of India
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Regional Rural Banks
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Public Sector Banks
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Private Sector Banks
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Explanation:
Detailed explanation-1: -Earlier referred to as deficit financing, the Government can finance the Fiscal Deficit by borrowing from the Reserve Bank of India in lieu of government securities. This increases the money supply and can lead to inflation.
Detailed explanation-2: -deficit financing, practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.
Detailed explanation-3: -Fiscal deficit is the difference between the government’s total expenditure and its total receipt, including borrowings.
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