Multiple choice

Seigniorage is concerned with

  1. earning profit by government by issuing currency

  2. increase in revenue by increasing the tax rates

  3. taking debt from public

  4. controlling non-developmental expenses
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A Correct answer
Explanation

It is concerned with earning profit by government by issuing currency. Seigniorage is the profit earned by the government by issuing currency. It is the profit earned on the difference between face value of currency and its production cost. For instance, if the cost of production of a ten rupee coin is 50 paisa and its face value is Rs. 10, then a profit of Rs. 9.50 is earned on it.

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