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Question
Which of the following instruments does the government use while borrowing money from the general public or the RBI?
Which of the following instruments does the government use while borrowing money from the general public or the RBI?
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Solution
The correct option is C Government securities or bonds.
When the government borrows money from the general public or the RBI, it gives government securities or government bonds as security. Government security is a promise to repay the amount borrowed with a fixed percentage of interest on a specific date in future.
When the government borrows money from the general public or the RBI, it gives government securities or government bonds as security. Government security is a promise to repay the amount borrowed with a fixed percentage of interest on a specific date in future.
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