Question : The government's budget deficit can be financed through ____________.
Option 1: External grants
Option 2: Fiscal discipline
Option 3: Monetary policy
Option 4: Domestic borrowing
Correct Answer: Domestic borrowing
Solution : The correct answer is (D) Domestic borrowing.
When a government has a budget deficit, meaning its spending exceeds its revenue, it needs to finance the shortfall by borrowing money. Domestic borrowing refers to the government borrowing funds from domestic sources within the country. This can include issuing government bonds or treasury bills to individuals, banks, financial institutions, or other entities within the country.
By borrowing domestically, the government can tap into the savings and investments of its own citizens and institutions, which helps cover the deficit and fund its spending obligations. Domestic borrowing is a common method for governments to finance their budget deficits, as it allows them to manage their debt within the country's financial system.
Question : Which policy aimed to reduce the fiscal deficit and promote fiscal discipline in the 1991 economic policy?
Option 1: Monetary policy
Option 2: Fiscal policy
Option 3: Public debt policy
Option 4: External debt policy
Question : Which of the following expressions is correct regarding the Gross fiscal deficit?
Option 1: Gross fiscal deficit = Net borrowing at home - Borrowing from RBI + Borrowing from abroad
Option 2: Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad
Option 3: Gross Fiscal deficit = Net borrowing at home + Borrowing from RBI - Borrowing from abroad
Option 4: Gross fiscal deficit = Net borrowing at home - Borrowing from RBI - Borrowing from abroad
Question : The government's borrowing from foreign sources is known as ____________.
Option 1: External debt
Option 2: Public debt
Option 3: Trade deficit
Option 4: Current account deficit
Question : Fill in the blanks- The total borrowing requirement of the government is measured through _____________.
Option 1: Capital deficit
Option 2: Budgetary deficit
Option 3: Revenue deficit
Option 4: Fiscal deficit
Question : The 1991 economic policy aimed to reduce the fiscal deficit and promote fiscal discipline through:
Option 1: Increased government spending
Option 2: Higher taxes on individuals
Option 3: Public debt management
Option 4: Fiscal consolidation measures
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