If the ratio of indirect taxes to subsidies is 3:5 and net indirect taxes are negative ₹80 crore then what are subsidies?
Answer and explanation
Correct answer: ₹200 crore
Use NIT = indirect taxes − subsidies. With the ratio 3:5, let taxes = 3x and subsidies = 5x. Then NIT = 3x − 5x = −2x. Since NIT is −₹80 crore, −2x = −80, giving x = ₹40 crore. Subsidies are therefore 5x = ₹200 crore, so option C is correct. The other choices do not preserve both the 3:5 ratio and the negative net amount.
Frequently asked questions
What is the correct answer to this question?
₹200 crore
Why is this the correct answer?
Use NIT = indirect taxes − subsidies. With the ratio 3:5, let taxes = 3x and subsidies = 5x. Then NIT = 3x − 5x = −2x. Since NIT is −₹80 crore, −2x = −80, giving x = ₹40 crore. Subsidies are therefore 5x = ₹200 crore, so option C is correct. The other choices do not preserve both the 3:5 ratio and the negative net amount.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
