Practicing Success
Which of the following is indicated by a "Zero primary deficit"? |
Balanced current fiscal operations, excluding interest payments on past debt. Total borrowing requirements of the government Excess of total expenditure over total receipts Interest on present loan |
Balanced current fiscal operations, excluding interest payments on past debt. |
The correct answer is Option 1: Interest on past loans only which government has to borrow Primary deficit simply means fiscal deficit minus the interest payments. A "Zero primary deficit" indicates that the government's current fiscal operations are in balance, excluding interest payments on past debt. A zero primary deficit means that the government does not need to borrow for current expenditures beyond interest payments. In simple words, a zero primary deficit means that the excess of total expenditure over total receipts (fiscal deficit) is due solely to interest payments on past loans. |