Select the correct answer using the code given below
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 4 only
D. 1,3 and 4 only
Answer:B
Select the correct answer using the code given below
A. 1 and 2 only B. 1 and 3 only C. 2 and 4 only D. 1,3 and 4 only
Explanation: A deficit means one is spending beyond means Deficit financing can be done by external aids grants, borrowings and printing money All these means will lead to extra supply of money in the economy which will have the risk of inducing inflation Deficit financed by borrowings will result into increase in public debt That is why it is healthy for an economy to keep a low fiscal deficit