SSC
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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printing new currency notes
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replacing new currency with worn out currency
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public expenditure in excess of public revenue
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public revenue in excess of public expenditure
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Detailed explanation-1: -The correct answer is Public expenditure in excess of public revenue. Deficit financing means generating funds to finance the deficit which results from an excess of expenditure over revenue. The gap is covered by borrowing from the public by the sale of bonds or by printing new money.
Detailed explanation-2: -Deficit financing is also used in economic planning. Thus, deficit financing includes borrowing from the Reserve Bank Of India or the withdrawal of past balances/surpluses.
Detailed explanation-3: -In India, deficit financing is said to occur when the union government’s current budget deficit is covered by the withdrawal of the government’s cash balance and by borrowing money from the Reserve Bank of India.