| 1. Used as an instrument of economic policy |
| 2. It is used as a tool for meeting financial needs of government |
| 3. Used for the mobilization of surplus, non-utilized and idle resources in the economy |
A) 1 only
B) 1 and 2
C) 3 only
D) 1, 2 and 3
Correct Answer: D
Solution :
In under-developed countries, deficit-financing has been considered essential for financing the plans of economic development. It is used as a tool for meeting financial needs of government, especially in times of war. It is used for the mobilization of surplus, non- utilized and idle resources in the economy. It is also used as an instrument of economic policy for removing the conditions of depression 4 to raise the level of output and employment.
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