Fiscal deficit is that part of government expenditure which is financed by ___________.

borrowings

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capital receipts

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loan recoveries

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all of above

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Solution

The correct option is A borrowings
Fiscal deficit occurs when the government's total expenditure exceeds the revenue that it generates which excludes money from the borrowings. Hence, when there is fiscal deficit seen it is usually financed by borrowings. Hence, fiscal deficit is that part of government expenditure which is financed by borrowings.

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