Under theme: Indian Economy
32 PYQs. Learn elimination tricks first, then attempt the questions below.
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Every PYQ in this subtopic — exam mode with autosave, negative marking, and explanations after you submit.
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Common distractors and how to eliminate wrong options in this subtopic.
Always assess if an action increases government spending or decreases government revenue; both worsen the def…
Always check for recent policy changes, especially tax reforms, as UPSC frequently tests updated regulations.
In India, deficit financing is used for raising resources for
In India, deficit financing is used to raise resources for meeting the government's expenditure requirements when its revenue or receipts fall short of its planned expenditures. In other words, deficit financing is a way for the government to finance its budget deficit to stimulate economic growth.
Consider the following statements :
1. Inflation benefits the debtors.
2. Inflation benefits the bondholders.
Which of the statements given above is/are correct?
Statement 1 is correct: When prices rise, the real value of money decreases. Debtors repay their loans with money that has less purchasing power than when they borrowed it. Therefore, debtors gain because the real burden of debt falls. Statement 2 is incorrect: Bondholders (lenders) receive fixed interest payments. During inflation, the real value of these payments decreases, as money loses purchasing power. Thus, bondholders lose during inflation.