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    Question

    A twin deficit situation refers

    toтАФ
    A Revenue deficit + primary deficit Correct Answer Incorrect Answer
    B Fiscal deficit + revenue deficit Correct Answer Incorrect Answer
    C Fiscal deficit + current account deficit Correct Answer Incorrect Answer
    D Budget deficit + trade deficit Correct Answer Incorrect Answer
    E Capital account deficit + current account deficit Correct Answer Incorrect Answer

    Solution

    High fiscal deficits can widen CAD due to increased imports and reduced savings, leading to the twin deficit hypothesis.

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