Question
Deficit financing leads to inflation in general, but it can be checked if:
Answer: Option D
Answer: (d)The definition of deficit financing is likely to vary with the purpose for which such a definition is needed.In one sense by deficit financing we mean the excess of government expenditure over its normal receipts raised by taxes, fees, and other sources. In this definition such expenditure whether obtained through borrowing or from the banking system measures the budget deficit. Deficit financing is said to have been used whenever government expenditure exceeds its receipts. In under-developed countries deficit financing may be in two forms:Difference between overall revenue receipts and expenditureDeficit financing may be equal to borrowing from the banking system of the country.
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Answer: (d)The definition of deficit financing is likely to vary with the purpose for which such a definition is needed.In one sense by deficit financing we mean the excess of government expenditure over its normal receipts raised by taxes, fees, and other sources. In this definition such expenditure whether obtained through borrowing or from the banking system measures the budget deficit. Deficit financing is said to have been used whenever government expenditure exceeds its receipts. In under-developed countries deficit financing may be in two forms:Difference between overall revenue receipts and expenditureDeficit financing may be equal to borrowing from the banking system of the country.
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