To finance its deficit, the government
prefers borrowing from the public over
the RBI. What can be the best reason for
this?
Answer
A. Rate of interest charged by the RBI is
higher.
B. The government has to return the
sum to the RBI within a fixed period of
time
C.
Public borrowing does not affect the
money supply in the market
D. It increases the sale of government
bonds.
Answers
Answer:
Option (a) is correct option .
Explanation:
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Given: To finance its deficit, the government
To finance its deficit, the governmentprefers borrowing from the public over
To finance its deficit, the governmentprefers borrowing from the public overthe RBI. What can be the best reason for
To finance its deficit, the governmentprefers borrowing from the public overthe RBI. What can be the best reason forthis?
Answer:
(A) Rate of interest charged by the RBI is
Rate of interest charged by the RBI ishigher.
Explanation:
To the finance its expenditure, like government to borrow from to tha public rather & than withdraw cash balances or borrow from RBI. that is the reason is found on the effects of money supply in country. Borrowing are from the public has no effect & on money supply in the country.
whenever the government borrows.of money get transferred from public to the government and The net effect of total money is supply in country is nil.
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