A consumer wants to consume two goods X and Y. The price of the goods are ₹2 per unit and ₹5 per unit respectively and his income is ₹30. What will be the slope of the budget line?

Question

Refer the given text carefully: According to the Economic Survey 2024-25, the government budget’s projections for the fiscal year 2025-26 indicate that gross direct tax revenue will rise by 12.7%, while gross indirect tax collections are expected to grow by 8.3% relative to FY 2024-25. Direct taxes include income tax and corporate tax, reflecting earnings and profits of households and firms. It plays a key role in revenue growth of the government. Indirect taxes encompass Goods and Services Tax (GST), custom duties and other transaction-based levies. Higher growth rate projected for direct taxes suggests a push to enhance tax buoyancy through improved compliance and reforms. On the other hand, indirect taxes are expected to benefit from consumption trends and Goods and Services Tax (GST) administration improvements. The balance tax strategy aims to mobilize resources while supporting fiscal consolidation and sustainable economic growth. On the basis of the above passage and common understanding, answer the following questions: (i) Differentiate between the two types of taxes indicated in the above text, with suitable examples. (ii) Elaborate the likely consequences of the tax projections made by the government.

Answer 1

The correct option is (B) :-0.4

A consumer wants to consume two goods X and Y. The price of the goods are ₹2 per unit and ₹5 per unit respectively and his income is ₹30. What will be the slope of the budget line?

The Correct Option is B

Solution and Explanation

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