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Capital Account

Borrowing by ...

Question

Borrowing by government from World Bank to finance the BOP deficit will be recorded in the capital account.

A

True

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B

False

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Solution

The correct option is A True
Borrowing by government from World Bank to finance the BOP deficit will be recorded in the capital account as it increases the liability of the government.

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Q. Deficit financing means that the government borrows money from the ______.

Q. The term "Deficit Financing" means the Government borrows money from the ____________.

Q. Classify weather the following transactions will be recorded in current account or capital account.
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Q. _________ means financing of a budget deficit by borrowing from the central bank or printing more money.

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Items (Rs in lakh)

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(iv) Interest payment 150

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