Economics · Macroeconomic Indicators
The GDP series with base year 2022-23 resulted in a reduced nominal GDP figure compared to earlier projections. Which combination of fiscal stress outcomes is a DIRECT consequence of this 'denominator effect'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Tax buoyancy improves as a smaller nominal base amplifies tax revenue ratios.
- 2Nominal GDP growth rate rises; fiscal deficit in absolute rupee terms automatically declines.
- 3Fiscal deficit-to-GDP ratio and Centre's debt-to-GDP ratio both increase, even if absolute deficit and debt remain unchanged.✓
- 4Real GDP growth rate falls; RBI repo rate is mechanically revised upward.
Correct answer
Fiscal deficit-to-GDP ratio and Centre's debt-to-GDP ratio both increase, even if absolute deficit and debt remain unchanged.
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