SSC MTS 2026 PYQ — Question 59

Correct Answer:

Option 4: Either through taxation, by borrowing, or by printing notes.

Explanation:

A budgetary deficit arises when the government's total expenditure exceeds its total revenue. To bridge this deficit, the government adopts three primary measures—

Taxation → To increase revenue

Borrowing → From the market or foreign sources

Note Printing (Deficit Financing) → Money creation

In practice, the government employs a mix of these three methods, as relying on a single measure alone is insufficient.

Excessive printing of currency can lead to inflation; therefore, a balanced fiscal policy is essential.

Potential Questions for Upcoming Exams:

Question: What is a fiscal deficit?

Answer: Expenditure > Revenue

Question: What is inflation?

Answer: An increase in prices

Question: Who prepares the budget?

Answer: The Finance Minister

Question: What is a direct tax?

Answer: A tax paid directly