Multiple choice

Directions: Read the following passage/information and answer the question that follows:

Government borrowing from RBI, viz. printing of notes, has substituted for other ways of increasing reserve money for keeping monetary growth from slowing excessively in the context of slowing growth of net forex assets. This increasing monetisation of government debt can act only as an interim solution.

Which of the following expresses an idea concurrent to the above?

  1. The current government policy would not do as a long term solution.

  2. The main reason why the economy expands is the problem of credit.

  3. More monetisation is necessary to alleviate the liquidity crunch.

  4. RBI is responsible for the government deficit.

  5. Forex assets are an important source of fiscal growth.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 The last sentence of the argument leads us to (1) as the answer. It is only an interim solution. Hence, 5 could not be the answer.

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