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What does deficit financing involve?
  • a)
    Decreasing government expenditure
  • b)
    Increasing government revenue through taxes
  • c)
    Issuing fresh currency by the government to cover budget deficit
  • d)
    Borrowing money from foreign countries to cover budget deficit
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
What does deficit financing involve?a)Decreasing government expenditur...
Deficit financing involves the government issuing fresh currency to cover a budget deficit. It is used when government funds are inadequate to meet expenditures, and can stimulate demand and economic activity but must be used in limited amounts to avoid inflation.
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What does deficit financing involve?a)Decreasing government expenditureb)Increasing government revenue through taxesc)Issuing fresh currency by the government to cover budget deficitd)Borrowing money from foreign countries to cover budget deficitCorrect answer is option 'C'. Can you explain this answer?
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