| Direction: Q. 6 to 10 |
| Read the following case study and answer the question. |
| Budgetary deficits must be financed by either taxation, borrowing or printing money. Governments have mostly relied on borrowing, giving rise to what is called government debt. If the government continues to borrow year after year, then interest payments increase and these further increase the debt. Also, government borrowing from the people reduces the savings available to the private sector. This reduces capital formation and growth. These debts increases the burden on future generations as the debts raised today are required to be paid off in future. |
A) taxation
B) borrowings
C) printing money
D) All of the above
Correct Answer: D
Solution :
Deficit is the excess of expenditure over receipts and any of the above steps can be taken to fill this gap.
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