UPSC Exam > UPSC Questions > Consider the following statements: Fiscal Def...
Start Learning for Free
Consider the following statements:
- Fiscal Deficit is the difference between the government’s total receipts and total expenditures.
- The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times.
- Monetized Deficit refers to the purchase of government bonds by the central bank to finance the spending needs of the government.
Which of the statements given above are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2, and 3
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Consider the following statements: Fiscal Deficit is the difference be...
Explanation:
1. Fiscal Deficit vs Budget Deficit:
- Fiscal Deficit: The fiscal deficit is the difference between the government's total receipts (excluding borrowings) and total expenditures. It indicates the total borrowing requirements of the government.
- Budget Deficit: The concept of Budget Deficit is not the same as Fiscal Deficit. Budget Deficit refers to the situation where total government spending exceeds total government revenue. It does not take into account borrowings and other liabilities, unlike Fiscal Deficit.
2. Monetized Deficit:
- Monetized Deficit: Monetized Deficit refers to the situation where the government finances its spending needs by borrowing from the central bank. This usually involves the central bank purchasing government bonds. This increases the money supply in the economy and can lead to inflation.
Correct Answer:
- Therefore, the correct statements among the given options are:
- 1 and 3 only are correct.
- Statement 1 is correct as it defines Fiscal Deficit accurately.
- Statement 3 is correct as it explains Monetized Deficit correctly.
- Statement 2 is incorrect as the concept of Budget Deficit is different from Fiscal Deficit and not widely used in recent times.
Free Test
FREE
| Start Free Test |
Community Answer
Consider the following statements: Fiscal Deficit is the difference be...
Statement 1 is correct: When the balance of the government’s total receipts (i.e., revenue + capital receipts) and total expenditures (i.e., revenue + capital expenditures) turns out to be negative, it shows the situation of fiscal deficit. The situation of fiscal deficit indicates that the government is spending beyond its means. Fiscal deficit may be shown in the quantitative form (i.e., the total currency value of the deficit) or in the percentage form of the GDP for that particular year (percentage of GDP).
Statement 2 is incorrect: Budget Deficit is the difference between total budgeted expenditure and receipts that include the money borrowed from the market by the RBI by floating government securities. The concept was discarded in 1997 as it led to accounting distortions.
Statement 3 is correct: Monetized deficit is the monetary support the Reserve Bank of India (RBI) extends to the Centre as part of the government's borrowing programme. In other words, the term refers to the purchase of government bonds by the central bank to finance the government. spending needs of the Also known as debt monetisation, the exercise leads to an increase in total money supply in the system, and hence inflation, as RBI creates fresh money to purchase the bonds. The same bonds are later used to bring down inflation as they are sold in the open market. This helps RBI suck excess money out of the market and rein in rising prices.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer?
Question Description
Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer?.
Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Consider the following statements: Fiscal Deficit is the difference between the government’s total receipts and totalexpenditures. The concept of Budget Deficit rather than Fiscal deficit is widely used in the Economy in recent times. Monetized Deficit refers to the purchase of government bonds by the central bankto finance the spending needs of the government.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2, and 3Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup