With reference to the concept of fiscal deficit, consider the following statements:

Fiscal deficit is the difference between total revenue and total expenditure of a government.

Fiscal deficit can lead to inflation if financed by printing money.

A country with a high fiscal deficit is at risk of defaulting on its debt obligations.

Fiscal deficit is measured as a percentage of GDP.

How many of the above statements are correct?

Question

Fiscal deficit is the difference between total revenue and total expenditure of a government: This is correct. It indicates the shortfall in a government's finances.
Fiscal deficit can lead to inflation if financed by printing money: This is correct. Excessive money supply can devalue currency and increase prices.
A country with a high fiscal deficit is at risk of defaulting on its debt obligations: This is correct. High deficits can lead to increased borrowing and risk of insolvency.
Fiscal deficit is measured as a percentage of GDP: This is correct. It provides a relative measure of the deficit's size compared to the economy.

GKToday Admin · Accepted Answer

All four

Fiscal deficit is the difference between total revenue and total expenditure of a government: This is correct. It indicates the shortfall in a government's finances.
Fiscal deficit can lead to inflation if financed by printing money: This is correct. Excessive money supply can devalue currency and increase prices.
A country with a high fiscal deficit is at risk of defaulting on its debt obligations: This is correct. High deficits can lead to increased borrowing and risk of insolvency.
Fiscal deficit is measured as a percentage of GDP: This is correct. It provides a relative measure of the deficit's size compared to the economy.

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