Question
Assertion (A): Subsidy is a transfer payment.
Reason (R): Subsidy contributes to current flow of goods and services.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion and Reason 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

c)

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Assertion (A): Fiscal deficit indicates the total borrowing requirements of the government from all sources.
Reason (R): Fiscal deficit is financed through borrowings. From the financing side: Fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad.
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Assertion (A): LRR is the fraction of deposits that are kept with the central bank as cash reserves.
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Assertion (A): Credit creation is inversely related to the money multiplier.
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Reason (R): Closed Economy has no economic relations with the rest of the world.
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Assertion (A): Profits of public sector undertakings is revenue receipt.
Reason (R): Revenue Receipts are regular and recurring in nature.
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Reason (R): The liability to pay and burden of an indirect tax lie on different persons/entities.
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