Given below are two statements: Statement I: Deficit financing cannot create inflation in an economy. Statement II: If RBI reduces the cash reserve ratio, the credit creation will decline. In the light of the above statements, choose the most appropriate answer from the options given below:

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Economics · Economy

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Both Statement I and Statement II are incorrect

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Answer 1

Both Statement I and Statement II are correct

Answer 2

Both Statement I and Statement II are incorrect

Answer 3

Statement I is correct and Statement II is incorrect

Answer 4

Statement I is incorrect and Statement II is correct

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