Which type of public borrowing is normally used to finance a temporary cash-flow shortage within a financial year?
Correct answer: A. Short-term treasury bills
- A. Short-term treasury bills
- B. Perpetual government bonds
- C. Long-term development loans
- D. Foreign direct investment
Explanation
Treasury bills are short-term government securities commonly used to manage temporary financing needs. Long-term bonds and development loans are generally intended for longer financing periods, while foreign direct investment is private investment rather than public borrowing.
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About Public Finance
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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