Question

How do we get the primary deficit from the fiscal deficit?

Options

• By adding interest

• By subtracting interest

• By adding net exports

• By subtracting net exports

Answer 1

By subtracting interest

Explanation:

The primary deficit is the difference between the current year's fiscal deficit and interest payments on prior borrowings. The primary deficit is calculated by subtracting interest payments from the fiscal deficit. Primary Deficit = Fiscal Deficit - interest Payments.