NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
An economy's government has fiscal deficit of Rs 16,000 crore and interest payments of Rs 6,000 crore. Its primary deficit is Rs 10,000 crore. Next year, with the same interest payments, the government plans a primary deficit of Rs 7,000 crore. What will be the fiscal deficit next year?
The fiscal deficit will be Rs 13,000 crore. Fiscal deficit equals primary deficit plus interest payments, so adding the planned primary deficit of Rs 7,000 crore to unchanged interest of Rs 6,000 crore gives the total borrowing requirement.
- ARs 1,000 crore
- BRs 13,000 croreCorrect
- CRs 7,000 crore
- DRs 23,000 crore
Explanation
Fiscal deficit = primary deficit + interest payments. Next year: 7,000 + 6,000 = Rs 13,000 crore. Check with the current year: 10,000 + 6,000 = 16,000, which matches. Rs 23,000 crore wrongly adds the current fiscal deficit to 7,000; Rs 1,000 crore subtracts interest.
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
- If the Reserve Bank of India raises the repo rate, which of the following is the most likely immediate effect on the economy?
- Which statement best describes the Phillips curve relationship in short-run economic analysis?
- In macroeconomic analysis, which of the following is classified as a lagging economic indicator?
- In macroeconomic analysis, which of the following best describes a lagging indicator?
- A widening current account deficit, other factors unchanged, would generally exert which pressure on the domestic currency?
- Nominal GDP of an economy grows from Rs 200 lakh crore to Rs 220 lakh crore in a year, while the GDP deflator rises from 100 to 105. Approxi…