Question

Which of the following is not an 10
assumption of the principle of
MSA?*
O All taxes result in sacrifice
O
Public revenue consists only of
taxes
O The budget may be surplus or deficit
O
All public expenditures lead to
benefits​

Answer 1

Answer: all public expenditures lead to benefits

Explanation:

Answer 2

The correct answer is option (c.) The budget may be surplus or deficit

Explanation:

• The Principle of Maximum Social Advantage states that public finance leads to economic welfare when public expenditure & taxation are carried out up to that point where the benefits derived from the MU (Marginal Utility) of expenditure is equal to the Marginal Disutility or the sacrifice imposed by taxation.
• Among all the options- The budget may be surplus or deficit is not an 10 assumption of the principle of MSA.
• The Assumptions of Principle of Maximum Social Advantage are: All taxes result in sacrifice, All public expenditure lead to benefit, Public revenue consists of only taxes and government has no other source of income.