Question:
The ‘Primary Deficit’ of a government budget is calculated as the
(1) overall budget deficit minus interest payments.
(2) recurrent expenditure minus government revenue.
(3) total expenditure minus total revenue.
(4) overall budget deficit plus interest payments.
(5) total capital expenditure minus foreign grants.
Correct Answer:
(1)
Answer Explanation:
The primary deficit measures the current fiscal effort of the government. It is calculated by taking the overall fiscal deficit and subtracting the interest payments on accumulated past debt. This shows if current revenues are enough to cover current discretionary spending.
Topic: Public Finance Year: 2019
Leave a Reply