Question

The deficit in a government budget can be reduced by ______ 

Options

• Taxes.should be increased

• Reduction in Government Expenditures

• Disinvestment

• All of the above

Answer 1

The deficit in a government budget can be reduced by All of the above

Explanation:

The following steps can be taken to lower the deficit in a government budget:

1. Taxes need to be raised. The government can devise a strategy for increasing direct taxes in order to boost revenue. It can also be increased by raising tax rates or introducing new levies. Because the cost of collection is cheaper, direct taxes are more productive.
2. Government Expenditure Reduction: This can be accomplished by making government activities more efficient through better program development and administration.
3. Disinvestment: The government can increase its revenue by selling shares in PSUs (Public Sector Undertaking).
4. By retreating from some areas where it previously operated, the government's scope and mission will be altered.