When government fiscal deficit is equal to interest payment of government then Primary Deficit will be :
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : Zero
1. Primary deficit= Total revenue - Total expenditure excluding interest payments on its debt
2. Primary deficit = Fiscal deficit - Interest payment. The interest payment will be the payment that a government makes on borrowings to the creditors.
3. The primary deficit tends to be zero when the fiscal deficit equals the interest payment.