In the context of the Indian economy, the 'Twin Deficit' problem refers to:
A. Simultaneous existence of fiscal deficit and current account deficit
B. Budget surplus and trade surplus
C. Capital account surplus and fiscal surplus
D. Only revenue and primary deficits
Answer: Option A
Solution (By JKSSB Mock Tests)
The twin deficit hypothesis refers to the co-existence of a fiscal deficit and a current account deficit, which can be linked through the absorption approach or saving-investment identity.
Explanation:
Good money should be durable, portable, divisible, uniform, recognisable and relatively scarce so that it can effectively perform its functions.
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