Question
With reference to the concept of ‘Helicopter money’,
consider the following statements: 1. It refers to non-repayable money transfer from the central bank to the government. 2. It aims at increasing the money supply by purchasing government or other financial securities to spark economic growth. 3. Helicopter Money is an unconventional monetary policy tool aimed at bringing a flagging economy back on track. Which of the above statements is/are correct?Solution
Statement 1 is correct: Helicopter money is the non-repayable money transfer from the central bank to the government. Statement 2 is incorrect: Helicopter money is an unconventional alternative to quantitative easing, but both aim to boost consumer spending and increase inflation.
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