If indirect taxes decrease by ₹15 crore and subsidies decrease by ₹9 crore, what is the change in net indirect taxes?
Answer and explanation
Correct answer: Decrease of ₹6 crore
Since net indirect taxes = indirect taxes − subsidies, their change equals −₹15 crore − (−₹9 crore). This gives −₹6 crore, meaning a decrease of ₹6 crore. Option B is correct. The decrease in subsidies partly offsets the tax decrease because a smaller amount is being subtracted. Treating both falls as reductions would incorrectly give ₹24 crore.
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What is the correct answer to this question?
Decrease of ₹6 crore
Why is this the correct answer?
Since net indirect taxes = indirect taxes − subsidies, their change equals −₹15 crore − (−₹9 crore). This gives −₹6 crore, meaning a decrease of ₹6 crore. Option B is correct. The decrease in subsidies partly offsets the tax decrease because a smaller amount is being subtracted. Treating both falls as reductions would incorrectly give ₹24 crore.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - Market price and factor cost.
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