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Question

There has been a persistent deficit budget year after yearWhich action/actions of the following can be taken by the Government to reduce the deficit?

1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty

Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4

Answer:

C

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Explanation:

To reduce a persistent deficit budget, the government can take the following actions:

Reducing revenue expenditure: By cutting down on unnecessary expenses and prioritizing essential expenditures, the government can reduce its overall spending.

Rationalizing subsidies: The government can review and streamline existing subsidy programs to ensure they are targeted to those who truly need them and eliminate any wasteful subsidies.

Therefore, the correct answer is (c) 1 and 3 only. Introducing new welfare schemes (option 2) and reducing import duty (option 4) may not directly contribute to reducing the deficit and can potentially increase government spending or reduce revenue, respectively.

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