Question

Is revenue deficit always necessary inflationary.​ ​

Answer 1

RBI prints new currency to meet the deficit requirements of the government. This increases the money supply in the economy. ... However if the increase in money supply increases supply of goods and services or it used for developmental expenditures then fiscal deficit will not prove to be inflationary

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Answer 2

hi mate ,,,

here is your answer ☺️,,,,

✔️✔️ revenue deficit is not always inflationary.

if there are underutilized resources in the country and output is restricted because of deficient demand, a high fiscal deficit will be accomplished by high demand leading to higher output and therefore will not be inflationary.

✔️✔️ fiscal demand will be inflationary if as a result of increase in demand , because of cut in taxes and increase in government spending, firms are not able to supply more goods at the prevailing Prices. in such situation rise in demand will result in higher prices also .

☺️☺️may this answer helps you a lot....