Which of the following statements is true about Fiscal
Deficit? 1.Fiscal deficit is the difference between the government's total expenditure and its total revenue (including borrowings). 2.A high fiscal deficit can lead to inflation, appreciation of the currency and an increase in the debt burden.
AOnly 1Correct AnswerIncorrect Answer
BOnly 2Correct AnswerIncorrect Answer
CBoth are correctCorrect AnswerIncorrect Answer
DNone of the aboveCorrect AnswerIncorrect Answer
Solution
Fiscal deficit does not include borrowing. This may cause the currency to devalue rather than appreciate.