World Bank Bumps Up India’s Growth Projection

EconEye Admin

4 years ago

The World Bank forecasts growth for India in the current year at 6.9%, as stronger consumption and more robust domestic activity are expected. A World Bank senior economist said India’s fiscal deficit is expected to decline over the next few years.—Bloomberg.com

Answer the following questions to check your understanding of the story.

What is the 6.9% growth that the World Bank is forecasting for India?

The World Bank is forecasting growth of ____________.

a) consumer expenditure

b) real GDP

c) jobs

d) potential GDP

Wrong! - The World Bank is forecasting growth of the Indian economy. What variable measures all the production within an economy?

Correct! - The World Bank is forecasting that India will experience a 6.9% increase in real GDP.

What is a country’s fiscal deficit and why might faster growth shrink it?

A country’s fiscal deficit is the amount by which ____________. Faster growth might shrink the fiscal deficit if ____________.

a) government outlays exceed receipts; personal income taxes increases and debt interest decreases

b) the cyclical deficit exceeds the structural deficit; outlays decrease and receipts increase

c) government outlays exceed receipts; outlays increase slower than receipts increase

d) the structural deficit exceeds the cyclical deficit; outlays increase slower than receipts increase

Wrong! - A country’s fiscal deficit is its government budget deficit. How is the government budget balance determined? When is the government budget in a deficit? How can changes in the items that make up the government budget shrink the government budget deficit?

Good Job! - A country’s fiscal deficit is its government budget deficit. The government has a budget deficit when its outlays exceed receipts. If faster growth increases receipts at a faster pace than outlays increase, then faster growth shrinks the fiscal deficit.

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