NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
An economy's fiscal deficit is ₹16 lakh crore, interest payments are ₹10 lakh crore, and GDP at market prices is ₹320 lakh crore. What are the fiscal deficit and the primary deficit as percentages of GDP?
Fiscal deficit is 5.0% of GDP (16/320) and primary deficit is about 1.9% (6/320), since primary deficit equals fiscal deficit less interest payments. Adding interest rather than subtracting it gives the incorrect 8.1%.
- A5.0% and 1.9%Correct
- B5.0% and 8.1%
- C3.1% and 5.0%
- D5.0% and 3.1%
Explanation
Fiscal deficit/GDP = 16/320 = 5.0%. Primary deficit = fiscal deficit minus interest payments = 16-10 = 6 lakh crore, which is 6/320 = 1.875%, about 1.9%. Adding interest instead gives 8.1%, which is the wrong sign; 3.1% is interest/GDP.
Did you get it right without looking?
One question tells you little. A timed set on Economic Analysis shows your real accuracy, how long you take and where you lose marks.
More Economic Analysis questions
- Which fiscal measure is most directly described as a 'primary deficit' being zero?
- A persistent widening of the current account deficit, financed by volatile short-term capital inflows, is most likely to make a country's cu…
- Which of the following is classified as a lagging economic indicator?
- Under the expenditure approach, GDP at market prices is computed as consumption plus investment plus government spending plus:
- In business cycle analysis, which of the following is classified as a lagging indicator?
- Nominal GDP of an economy grows from Rs 200 lakh crore to Rs 224 lakh crore in a year, while the GDP deflator rises from 100 to 107. What is…