The correct measure of the deficit is represented by which of the following expressions?
A)iB - G + T.
B)iB + T - G.
C)rB - G + T.
D)(i - π)B + G - T.
E) none of the above

Question

Quizplus · Accepted Answer

The correct measure of the deficit is represented by expression D, which is (i - π)B + G - T. This expression measures the nominal budget deficit (i - π)B plus net interest payments (G - T). The nominal budget deficit accounts for the difference between total government spending (G) and total revenues (T) while net interest payments account for the portion of the deficit that is financed by borrowing. Hence, expression D provides the most accurate representation of the budget deficit.

The Correct Measure of the Deficit Is Represented by Which