Economics · Fiscal Policy
In fiscal accounting, how is the 'Primary Deficit' calculated, and why is it considered a significant measure of the government's current fiscal health?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is calculated as Total Expenditure minus Total Receipts; it shows the absolute annual budgetary shortfall.
- 2It is calculated as Revenue Deficit minus Capital Expenditure; it reflects the systemic asset waste.
- 3It is calculated as Fiscal Deficit minus Interest Payments; it shows the borrowing requirement for current year expenditures excluding past debt obligations.✓
- 4It is calculated as Fiscal Deficit plus Interest Payments; it shows the total gross borrowing requirement.
Correct answer
It is calculated as Fiscal Deficit minus Interest Payments; it shows the borrowing requirement for current year expenditures excluding past debt obligations.
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