Deficit financing means that the government borrows money from the
This questions was previously asked in
PCS Previous year General Studies paper (2018)
Revenue Department
Incorrect AnswerWorld Bank
Incorrect AnswerNone of the above
Incorrect AnswerExplanation:
When the revenue of the government is shorter than its expenditure then this situation is dealt by printing more currency, buying from public and foreign institution. This temporary arrangement of the money is known as the deficit financing. The deficit financing is done in three ways;
1. Printing new currency notes
2. Borrowing from internal sources (RBI, General Public, Ad-hoc Treasury Bills & government bonds etc.)
3. Borrowing from External Sources (like borrowing from developed countries and International institutions like World Bank, IMF, etc.)
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By: Dr. Vivek Rana