Question

Assertion (A): In public finance, expenditure is adjusted according to income.

Reason (R): In public finance, government determines expenditure first then means to raise funds.

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 (А).

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

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

Answer 1

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

Explanation:

The assertion is false since, unlike individuals, governments do not limit their spending based on current income. The reasoning is exactly true: public finance runs in reverse, which means that the state first assesses its expenditure needs and then develops measures to raise the matching revenue.