Assertion & Reason: The Government Budget & the Economy

1. Assertion (A): Corporation tax is a direct tax.        Reason (R): Direct tax are those tax whose money burden cannot be shifted to any other person :

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

2.Assertion (A): Equitable distribution of income and wealth is a sign of social justice: Reason (R):Distribution of income and wealth can be improved by imposing taxes on rich and giving subsidies to the poor.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D)Assertion (A) is false but reason (R) is true.

... Answer is B)

3.Assertion (A): Revenue budget impacts asset-liability status of the government. Reason(R): High capital receipts often related to compulsion of borrowings.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is D)

4.Assertion: Gross fiscal deficit shows estimated borrowing by the government to cope with its expenditures during the year. Reason (R): Often it is expressed as a percentage of GDP.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

5.Assertion (A): Pension is a revenue expenditure. Reason (R): Pension does not lead to any type of asset formation.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

6.Assertion (A): There can be a fiscal deficit without revenue deficit. Reason (R): High fiscal deficit leads to crowding-out in an economy.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is B)

7.Assertion (A): Recovery of loan by the government is capital receipts. Reason (R): Disinvestment is revenue receipts of the government.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is C)

8. Assertion (A): When the government takes more loans to repay earlier loans may leads to a situation of debt trap. Reason (R): Taking loans may not create burden to the economy.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is B)
If loans can be utilized in creation of asset.

9.Assertion (A): Fiscal deficit is zero in case there is no provision for borrowing in the government budge. Reason (R): Higher revenue deficit always lead to higher fiscal deficit

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is C)

10.Assertion (A): When tax rate remains constant at any level of income is called proportional tax. Reason (R): Income tax is an example of proportional tax.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is C)

11.Assertion (A): Goods and service tax (GST) is an indirect tax. Reason (R): Indirect taxes are those tax whose money burden cannot be shifted to any other person.

A)Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is C)

12.Assertion (A): A tax rate increase with the increase in income and decrease with the fall in income is called progressive tax: Reason (R): Progressive tax can help to reduce the inequalities of income of the government.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

13. Assertion (A): The difference between primary deficit and interest payment is fiscal deficit. Reason (R): Fiscal deficit is measured in terms of borrowings.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C)Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is D)

14.Assertion (A): High fiscal deficit leads to high revenue deficit. Reason (R): High fiscal deficit leads to increase of interest payment.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

15.Assertion (A): Expenditure on interest payment is a revenue expenditure. Reason (R): expenditure on interest payment neither reduced liability nor increase asset of the government.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)

16.Assertion (A): The government budget is a statement of actual receipts and expenditure of the government during a fiscal year. Reason (R): In India fiscal year  is 1st April to 31st March.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is D)
Budget is a statement of estimated (not actual) revenue and expenditure.

17.Assertion (A): Money received through disinvestment is a capital receipts. Reason (R):Money received through disinvestment causes reduction of liability of the government.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is C)

18.Assertion (A): Dividend received from public sector undertakings (PSU) is a part of revenue receipts. Reason (R): Income tax is a progressive tax.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is B)

19.Assertion (A): Deficit budget is not desire during periods of inflation. Reason (R): Surplus budget is not desire during the periods of deflation.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is B)

20.Assertion (A): Escheat is a revenue receipts. Reason (R): Revenue receipts are those receipts which neither create liability nor reduce asset of the government.

A) Both assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but reason (R) is false.
D) Assertion (A) is false but reason (R) is true.

... Answer is A)