| There has been a persistent deficit budget year after year, Which of the following actions can be taken by the government to reduce the deficit? |
| 1. Reducing revenue expenditure |
| 2. Introducing new welfare schemes |
| 3. Rationalising subsidies. |
| 4. Expanding industries |
| Select the correct answer using the codes given below. |
A) 1 and 3
B) 2 and 3
C) Only 1
D) All of these
Correct Answer: A
Solution :
Exp. [a] A budget deficit is caused when a government spends more than its collects revenue. Government revenue includes all amounts of money (i.e. taxes and/or fees) received from sources outside the government entity. A subsidy is a form of financial aid or support? generally with the aim of promoting economic and social policy. So by the reducing revenue expenditure and rationalising subsidies, the government can reduce the deficit. Introducing new welfare scheme and expenditure industries are the major government expenditure. Hence, option is correct.
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