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Home Questions BRUJUV44V6
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

Read the following statements - Assertion (A) and Reason (R):
Assertion: Government deficit can be reduced by an increase in taxes or reduction in expenditure.
Reasoning: In India, the government has been trying to increase tax revenue with greater reliance on indirect taxes .
From the given alternatives choose the correct one:

Options:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Assertion (A) is true but Reason (R) is false.

Assertion (A) is false but Reason (R) is true.

Correct Answer:

Assertion (A) is true but Reason (R) is false.

Explanation:

The correct answer is option 3: Assertion (A) is true but Reason (R) is false.

Assertion: Government deficit can be reduced by an increase in taxes or reduction in expenditure. This is correct.
Reasoning: In India, the government has been trying to increase tax revenue with greater reliance on indirect taxes. This is incorrect. In India, the government has been trying to increase tax revenue with greater reliance on direct taxes (indirect taxes are regressive in nature – they impact all income groups equally).

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