Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Government of India was short of fund so, it decided to fulfill the gap generated with the help of "Deficit financing", According to you, whom will the government approach to?

Options:

State bank of India

Finance secretory 

Reserve bank of India

Finance minister

Correct Answer:

Reserve bank of India

Explanation:

Central government borrows money from RBI i.e. the central bank of India. When the expenditure of the government is exceeded from its revenue, it issues securities to the RBI and in return raise money.