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Consider the following statements regarding Monetisation of the deficit.
1. Deficit monetisation means printing large sums of money and distributing it to the public.
2. The Monetisation of the deficit is not practised in India after 1991 Economic Reforms.
Which of the above statements is/are incorrect?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Monetisation of the defic...
In layman's language, Monetisation of deficit means printing more money. In other words, Monetisation of deficit happens when RBI buys government securities directly from the primary market to fund the Government's expenses.
The Monetisation of the deficit was in practice in India until 1997, whereby the central Bank automatically monetised government deficit through ad-hoc treasury bills.
What is helicopter money? : This is an unconventional monetary policy tool aimed at bringing a flagging economy back on track. It involves printing large sums of money and distributing it to the public. Under such a policy, a central bank "directly increase the money supply and, via the government, distribute the new cash to the population to boost demand and inflation."
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Consider the following statements regarding Monetisation of the defic...
Correct answer is C
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Consider the following statements regarding Monetisation of the deficit.1. Deficit monetisation means printing large sums of money and distributing it to the public.2. The Monetisation of the deficit is not practised in India after 1991 Economic Reforms.Which of the above statements is/are incorrect?a) 1 onlyb) 2 onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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