How is the primary deficit different from the fiscal deficit?None among the given optionsThe primary deficit includes interest payments on government debt The primary deficit excludes interest payments on government debtThe fiscal deficit excludes interest payments on government debt
Question
How is the primary deficit different from the fiscal deficit?None among the given optionsThe primary deficit includes interest payments on government debt The primary deficit excludes interest payments on government debtThe fiscal deficit excludes interest payments on government debt
Solution
The primary deficit is different from the fiscal deficit in that the primary deficit excludes interest payments on government debt. This means that the primary deficit only considers the current year's budget balance, without taking into account the cost of servicing the existing debt.
On the other hand, the fiscal deficit includes all government expenditures, including interest payments on government debt. This means that the fiscal deficit gives a more comprehensive picture of the government's financial situation, as it takes into account both current spending and the cost of servicing the existing debt.
So, the correct option is "The primary deficit excludes interest payments on government debt".
Similar Questions
How is the primary deficit different from the fiscal deficit?
With reference to Figures 1 and 2, explain the difference between a fiscal deficit and national debt.
he deficit is what occurs in a given year when government spending is greater than tax revenues while the national debt is the accumulation of budget deficits over time.TrueFalse
If the federal government uses fiscal policy to close a recessionary gap, what will happen to the budget deficit and the national debt?Multiple choice question.The budget deficit will shrink but the national debt will grow.Both the budget deficit and the national debt will shrink.Both the budget deficit and the national debt will grow.The budget deficit will grow but the national debt will shrink.
fiscal deficit
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