Monetization of deficit refers to: MCQ with Answer and Explanation

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Monetization of deficit refers to:

A. reducing fiscal deficit

B. RBI directly purchasing government securities, increasing money supply

C. increasing foreign aid

D. government selling securities to banks and public

Answer: Option B

Solution (By JKSSB Mock Tests)

Monetization of deficit occurs when the central bank directly purchases government securities, creating money.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'government route' for FDI requires:

A. only SEBI approval

B. only RBI approval

C. no approval

D. prior approval from the government

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Correct Answer: Option D

Explanation:
Government route requires prior approval from the concerned government ministry.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is NOT a type of elasticity of demand?

A. Supply elasticity of demand

B. Price elasticity

C. Income elasticity

D. Cross elasticity

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Correct Answer: Option A

Explanation:
Elasticity of demand includes price elasticity, income elasticity and cross elasticity. Elasticity of supply is a separate concept relating to supply response.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is not a determinant of money demand in Keynesian theory?

A. Precautionary motive

B. Speculative motive

C. Depreciation motive

D. Transactions motive

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Correct Answer: Option C

Explanation:
Keynes identified transactions, precautionary and speculative motives for holding money, not depreciation motive.

This question belongs to: Economy GK Economy Set 1

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