Given below are two statements: Assertion (A): A persistent budgetary deficit financed through deficit financing can lead to a rise in the general price level. Reason (R): Deficit financing through the creation of new currency increases the money supply in the economy. Choose the correct answer from the options given below:

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Economics · Macroeconomics and Public Finance

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Both (A) and (R) are true and (R) is the correct explanation of (A)

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Answer 1

Both (A) and (R) are true and (R) is the correct explanation of (A)

Answer 2

Both (A) and (R) are true but (R) is NOT the correct explanation of (A)

Answer 3

(A) is true but (R) is false

Answer 4

(A) is false but (R) is true

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