New SIDBI Grade A New Batch Starts on Nov 18

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    Question

    Which of the following statements is true about Fiscal Deficit?

    1.Fiscal deficit is the difference between the government's total expenditure and its total revenue (including borrowings).

    2.A high fiscal deficit can lead to inflation, appreciation of the currency and an increase in the debt burden.

    A Only 1 Correct Answer Incorrect Answer
    B Only 2 Correct Answer Incorrect Answer
    C Both are correct Correct Answer Incorrect Answer
    D None of the above Correct Answer Incorrect Answer

    Solution

    Fiscal deficit does not include borrowing. This may cause the currency to devalue rather than appreciate.

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