Over-funding is when the State Bank of Pakistan ?
Correct answer: B. sells more government bonds than are required to finance the PSBR
- A. sells less government bonds than are required to finance the PSBR
- B. sells more government bonds than are required to finance the PSBR
- C. sells government securities on the open market
- D. buys government securities on the open market
Explanation
The PSBR is the government's borrowing requirement. Over-funding occurs when the State Bank sells more government bonds than are needed to finance that requirement.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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