Question

The ways of a government budget deficit reduction are ______

Options

• Decreasing expenditure

• Increasing revenue

• Both decreasing expenditure a increasing revenue

• None of the above

Answer 1

The ways of a government budget deficit reduction are Both decreasing expenditure an increasing revenue

Explanation:

The following are some methods for reducing the government's budget deficit:

1. Decreasing expenditure
2. Increasing revenue

(i) Decreasing expenditure

1. Government spending should be reduced by making government activities more planned and efficient.
2. The government may be able to entice the private sector to invest in capital projects.

(ii) Increasing revenue 

1. Higher taxes mean more revenue for the government. Additionally, new taxes may increase the government's revenue.
2. To boost revenue, the government can sell shares in Public Sector Undertakings (PSU disinvestment).