Consider the following statements regarding fiscal deficit management: Statement I: External borrowings are preferred over market-backed domestic financing to manage fiscal deficit, provided the external loans are comparatively cheaper and have a long-term maturity. Statement II: Internal borrowings through market loans are considered the least preferred or third route of fiscal deficit management. Which of the statement(s) is/are correct?

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Economics · Fiscal Policy

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Only statement I is true

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Answer 1

Both statements I and II are false

Answer 2

Both statements I and II are true

Answer 3

Only statement II is true

Answer 4

Only statement I is true

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