SSC Economics Sample Paper NCERT Sample Paper-3

  • question_answer
    Consider the following:
    1. Primary deficit = Fiscal deficit - Interest Payments.
    2. The Primary deficit shows the extent to which government is borrowing even if there is no interest is to be paid. Which of these statements is/are correct?

    A)  Only 1 

    B)  Only 2

    C)  Both 1 and 2

    D)  neither 1 nor 2

    Correct Answer: C

    Solution :

    [c] Gross Primary Deficit is Gross Fiscal Deficit less interest payments. Net Primary Deficit is Net Fiscal Deficit minus net interest payments. A shrinking primary deficit indicates progress towards fiscal health. The Budget document also mentions deficit as a percentage of GDP. This is to facilitate comparison and also get a proper perspective. Prudent fiscal management requires that the government does not borrow to consume in the normal course.

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