Question

2) The primary deficit is equal to A) the amount by which government purchases, transfers, and net interest exceed tax revenues. B) the amount by which government purchases and transfers exceed tax revenues. C) the deficit plus net interest payments. D) total tax revenues minus net interest minus government expenditures.

Answer 1

Answer:

B. the amount by which government purchases and transfers exceed tax revenues.

Explanation:

Primary deficit is the borrowing requirements of government excluding interest. It is the addition of government purchases and transfers less tax revenues. It is the amount by which spending exceeds money received in form of revenues.

Mathematically

Primary Deficit = Government purchases + transfers - tax revenues.

Primary deficits is different from deficits as net interest isn't added.