Question : What is the change in fiscal deficit if both the primary deficit and interest payments are doubled?
Option 1: Increase by 100%
Option 2: Increase by 200%
Option 3: Decrease by 50%
Option 4: Decrease by 100%
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Correct Answer: Increase by 100%
Solution : The correct option is Increase by 100%.
If both the primary deficit and interest payments are doubled, the change in the fiscal deficit would depend on their initial values and the magnitude of the change.
Change in fiscal deficit = (new primary deficit - old primary deficit) + (new interest payments - old interest payments).
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