Which of the following statement/statements are true?
Statement 1: By taxation, the government transfers the burden of reduced consumption on future generations.
Statement 2: Government borrowing from the people reduces the savings available to the private sector.

Statement 2 is true and Statement 1 is false

The correct answer is option 4: Statement 2 is true and Statement 1 is false

Statement 1: By taxation, the government transfers the burden of reduced consumption on future generations. This is incorrect. This statement is false. Taxation reduces the current income and consumption of the present generation. The burden is borne immediately by those who pay taxes, not shifted to future generations. The idea of shifting burden to future generations is associated with government borrowing, not taxation.

Statement 2: Government borrowing from the people reduces the savings available to the private sector. This is true. When the government borrows from the people, it competes with the private sector for loanable funds. This can drive up interest rates and make it more expensive for businesses and individuals to borrow money. As a result, the savings available to the private sector may decrease, potentially limiting investment and economic growth.