CA Foundation Exam > CA Foundation Questions > Which of the following statement is true?a)Lo...
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Which of the following statement is true?
- a)Loans from IMF are revenue receipts.
- b)A higher revenue deficit necessarily leads to a higher fiscal deficit.
- c)Borrowing by a government represents a situation of fiscal deficit.
- d)Revenue deficit is the excess of capital receipts over the revenue receipts.
Correct answer is option 'C'. Can you explain this answer?
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Which of the following statement is true?a)Loans from IMF are revenue ...
Borrowing by a government represents a situation of fiscal deficit.
Borrowing by a government represents a situation of fiscal deficit.
Borrowing by a government represents a situation of fiscal deficit.
Most Upvoted Answer
Which of the following statement is true?a)Loans from IMF are revenue ...
Borrowing by a government represents a situation of fiscal deficit.
Explanation:
A fiscal deficit occurs when a government's total expenditure exceeds its total revenue in a given period. It means that the government is spending more money than it is earning. To cover this deficit, the government may resort to borrowing from various sources such as domestic markets, external sources, or international financial institutions like the International Monetary Fund (IMF).
Borrowing by a government is a common way to finance its fiscal deficit. When a government borrows, it essentially takes on debt that it will have to repay in the future. This borrowing can help the government fund its various expenses, such as infrastructure development, social welfare programs, or even to manage existing debt obligations.
The borrowing can be in the form of issuing government bonds or taking loans from institutions like the IMF. These loans often come with conditions and terms that the borrowing government needs to adhere to, such as implementing certain economic reforms or austerity measures.
Borrowing enables the government to bridge the gap between its expenditure and revenue, but it also increases its overall debt burden. If the borrowing is not managed effectively, it can lead to a debt crisis and impact the country's overall economic stability.
Therefore, it is correct to say that borrowing by a government represents a situation of fiscal deficit because it is a way for the government to finance its expenditure when its revenue falls short.
Explanation:
A fiscal deficit occurs when a government's total expenditure exceeds its total revenue in a given period. It means that the government is spending more money than it is earning. To cover this deficit, the government may resort to borrowing from various sources such as domestic markets, external sources, or international financial institutions like the International Monetary Fund (IMF).
Borrowing by a government is a common way to finance its fiscal deficit. When a government borrows, it essentially takes on debt that it will have to repay in the future. This borrowing can help the government fund its various expenses, such as infrastructure development, social welfare programs, or even to manage existing debt obligations.
The borrowing can be in the form of issuing government bonds or taking loans from institutions like the IMF. These loans often come with conditions and terms that the borrowing government needs to adhere to, such as implementing certain economic reforms or austerity measures.
Borrowing enables the government to bridge the gap between its expenditure and revenue, but it also increases its overall debt burden. If the borrowing is not managed effectively, it can lead to a debt crisis and impact the country's overall economic stability.
Therefore, it is correct to say that borrowing by a government represents a situation of fiscal deficit because it is a way for the government to finance its expenditure when its revenue falls short.
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Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer?
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Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer?.
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Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Which of the following statement is true?a)Loans from IMF are revenue receipts.b)A higher revenue deficit necessarily leads to a higher fiscal deficit.c)Borrowing by a government represents a situation of fiscal deficit.d)Revenue deficit is the excess of capital receipts over the revenue receipts.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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