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Read the following statements carefully and choose the correct alternatives given below: Statement 1: Fiscal Deficit = Total Budget Expenditure - Total Budget Receipts (Net of borrowing) -

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Question

Read the following statements carefully and choose the correct alternatives given below:

Statement 1: Fiscal Deficit = Total Budget Expenditure - Total Budget Receipts (Net of borrowing)

Statement 2: Primary Deficit = Fiscal Deficit + Interest Payments.

Options

  • Both the statements are true.

  • Both the statements are false.

  • Statement 1 is true and Statement 2 is false.

  • Statement 2 is true and Statement 1 is false.

MCQ

Solution

Statement 1 is true and Statement 2 is false.

Explanation:

The difference between total expenditure and total receipts (revenue and capital receipts), excluding borrowing, is known as the fiscal deficit. Fiscal Deficit = Total Budget Expenditure - Total Budget Receipts (Net of borrowing). The primary deficit is the difference between the current year's fiscal deficit and interest payments on prior borrowings. Primary Deficit = Fiscal Deficit - Interest Payments.

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Measures of Government Deficit Or Surpluses
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