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

IMF

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Local bodies

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RBI

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Large corporates

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Solution

The correct option is C RBI
Deficit financing means filling the gap between government revenue and government expenditure in a government budget either by borrowing funds from central bank which is Reserve Bank of India (RBI) in case of India or printing currency. Deficit financing is done so that overall government expenditures matches with overall government income.

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