Question

10) Which among the following
situation indicates the government
spending beyond its means?
A) Fiscal deficit
B) Borrowing by the Government
C) Primary Deficit
D) Monetized Deficit​

Answer 1

Answer:

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Answer 2

The fiscal deficit indicates that the government is spending beyond its means.

Option: A

Explanation:

• The rate of inflation affects government revenue and expenditure in many different ways. As a result, it changes the size of the fiscal deficit.

• The fiscal deceit indicates that there is a shortfall in the revenue of the government in comparison to its spending.  

• The government can make use of the fiscal policy by increasing the taxes. This situation arises due to the budget deficit and borrowing.  

• It can be shown as follows:

        Fiscal deficit = Budget deficit + borrowings

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