Question

How does the government fund the expenditures if they are more than the revenues of the government?

• A. Printing new currency notes
• B. Increasing the tax rates
• C. Laying off government employees
• D. Charging high interest rates

Answer 1

The correct option is A Printing new currency notes

Sometimes, people have more money in hand due to certain government welfare schemes. For example, the government provides subsidies for products like chemical fertilisers to farmers. It also provides them support prices for their crops. Doing so increases the expenditure of the government. If such expenditures are more than the revenues of the government, it may fund these expenditures by printing new currency notes.