| Deficit financing is the phrase used to: |
| 1. Describe the financing of gap between government receipts and expenditure. |
| 2. It is financed by printing fresh money by the RBI. Which of these statements is/are correct? |
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: C
Solution :
[c] Government spending in excess of revenues so that a budget deficit is incurred, which is financed by borrowing recommended by Keynesian economists in order to increase economic activity and reduce unemployment. Also called compensatory finance, pump priming
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