Government borrowing to finance budget deficits ........

General Studies (CHSL) Indian Economy

Download Solution PDF

Government borrowing to finance budget deficits _____.

will exert downward pressure on interest rates

will have no effect on interest rates

will increase supply of loanable funds

will put upward pressure on interest rates

छोटे Courses बड़े Results

Master Indian Economy

Prepare through Micro-courses

Try Now

Explanation:

Government borrowing is another fiscal method by which savings of the community may be mobilized for economic development. The Governments resort to borrowing in order to finance schemes of economic development. Government or what is also called public borrowing becomes necessary because taxation alone cannot provide sufficient funds for economic development. Besides, too heavy taxation has an adverse effect on private saving and investment.