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:

borrowing by Government

Answer 2

ANSWER:

Correct answer is A) Fiscal deficit.  

EXPLANATION:

Difference between income and expenses by the government is called Deficit. When government is spending beyond its means, known as deficits which creates borrowings.

Government borrows funds either from central bank or it can raise the capital from the capital market such as issue of treasury bills and government bonds. It will increase the expenditures but money can be easily generated for the short term purpose. Capital expenditures are difficult to bear.