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. Deficit financing means that the government borrows money from
(1) The local bodies
(2) The Reserve Bank
(3) The neighbouring countries
(4) All the above
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Answer Posted / harman kaur
Deficit financing means when government borrow from central bank of county to cover its deficit in the budget . Deficit financing also means currency creates extra purchasing power and as a result the total circulation of currency increases, demand inceases and which results in prices rise .
This problem can be avoid by over valuation of money.
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