Question

Match List-I with List-II

Choose the correct answer from the options given below:

• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
• (A) - (II), (B) - (I), (C) - (IV), (D) - (III)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Hint:

Revenue items never touch the balance sheet (no change in assets or liabilities).
Capital items always alter the balance sheet (creating/reducing liabilities or reducing/creating assets).
Proportional income tax automatically moderates the spending multiplier, serving as a stabilizer.

Answer 1

The Correct Option is C

Concept:
Government budget components are systematically classified based on their direct impact on the assets and liabilities of the government, as well as their fiscal stabilizing properties.
Understanding fiscal policy requires distinguishing between current operational transactions and balance sheet capital adjustments.

Step 1: Analyzing Items in List-I:
(A) Automatic Stabilizers are built-in fiscal mechanisms that cushion economic fluctuations without deliberate discretionary policy action.
A proportional income tax is a prime example of an automatic stabilizer because tax collections rise automatically during economic booms and fall during recessions.
Hence, (A) corresponds directly to (II).
(B) Revenue payment or revenue expenditure refers to government expenses incurred for day-to-day administration and public services.
These expenditures do not lead to the creation of physical or financial assets, nor do they reduce any government liabilities.
Therefore, (B) corresponds directly to (I).
(C) Capital receipts are funds received by the government that lead to a creation of liability (such as market borrowings) or cause a reduction in financial assets (such as disinvestment or recovery of loans).
Thus, (C) corresponds directly to (IV).
(D) Total expenditure incurred by the government historically encompasses developmental and non-developmental outlays broadly categorized as plan and non-plan expenditure.
Therefore, (D) matches with (III).

Step 2: Matching and Comparison:
Aligning the identified pairs yields:
(A) matches with (II).
(B) matches with (I).
(C) matches with (IV).
(D) matches with (III).
This consistent alignment uniquely matches Option (C).
Final Answer:
Hence, the correct option is (C), establishing the combination (A)-(II), (B)-(I), (C)-(IV), and (D)-(III).