Question

Primary deficit will be equal to fiscal deficit when ______.

Options

• net interest payment is zero

• revenue deficit is zero

• fiscal deficit is zero

• none of these

Answer 1

Primary deficit will be equal to fiscal deficit when net interest payment is zero.

Explanation:

• Primary deficit is defined as:
  Primary Deficit = Fiscal Deficit − Interest Payments
• Therefore, if Interest Payments = 0, then:
  Primary Deficit = Fiscal Deficit
• Revenue deficit being zero or fiscal deficit being zero does NOT automatically make primary deficit equal to fiscal deficit.