Economics · Monetary Policy
Fiscal dominance undermines the efficacy of inflation targeting primarily because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1It completely eliminates international capital inflows.
- 2Financial markets expect the central bank to monetize government debt.✓
- 3It forces central banks to maintain fixed currency exchange rates.
- 4It automatically increases direct tax revenue.
Correct answer
Financial markets expect the central bank to monetize government debt.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Monetary Policy MCQs →Want more practice questions on Monetary Policy?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Monetary Policy