Which one of the following is likely to be the most inflationary in its effect?
Detailed Explanation:
Creating new money (Option 4) is the most inflationary method because it directly increases money supply without any corresponding increase in goods and services production, leading to demand-pull inflation.
Repayment of public debt reduces money supply; borrowing from public merely transfers existing money; borrowing from banks has moderate inflationary effect through credit creation, but printing new currency has the strongest direct impact on excess liquidity and price levels.
Question 10 of 10 Fiscal Deficit, Revenue Deficit and Public Debt
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In India, deficit financing is used for raising resources for
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