Which item appears as a direct source in the Reserve Bank of India's accounting identity for reserve money?
Question and options
Which item appears as a direct source in the Reserve Bank of India's accounting identity for reserve money?
Tax revenue collected by the government
Foreign borrowing by the government
Net RBI credit to the government
Budgetary expenditure by the government
Answer and explanation
Correct answer: C - Net RBI credit to the government
The reserve-money identity includes net RBI credit to the government as a direct sources-side term. Tax revenue, government foreign borrowing and budgetary expenditure are different fiscal measures.
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