Which of the following is a correctly matched pair?
| 1. | Primary deficit | A. | Fiscal deficit-interest payments |
| 2. | Revenue defecit | B. | Borrowings |
| 3. | Fiscal deficit | C. | Primary deficit + taxable items |
| 4. | Tax deficit | D. | Borrowings in the government budget |
Answer & explanation
Correct answer: option 1
Primary deficit refers to the difference between the current year's fiscal deficit and interest payment on previous borrowings. It indicates the borrowing requirements of the government, excluding interest.
Primary deficit = Fiscal deficit - interest payments