Statement — The income-tax rules need to be amended so that people have greater incentive to declare their actual wealth. Assumptions — I. The current income-tax rules are inadequate or sub-optimal. II. Some people do not declare their actual wealth.

Question

Solve this multiple-choice question and choose the correct option.

Accepted Answer

Introduction / Context:Policy-change statements usually presuppose (a) that the status quo is inadequate and (b) a specific behavioral problem exists that the change aims to address. Both are present here: current rules are not producing truthful declarations, and amendments are proposed to fix that. Given Data / Assumptions: Proposal: amend rules to increase incentives. I: current rules are not proper/effective enough. II: under-reporting or non-declaration exists. Concept / Approach:A remedy presupposes a malady. Without II, there is nothing to fix. Without I, there is no reason to change rules. Step-by-Step Solution: 1) Identify the target behavior: accurate wealth declaration.2) Infer the present failure (II) and inadequacy of rules (I).3) Conclude both assumptions are implicit. Verification / Alternative check:If everyone already declared accurately (¬II), amending rules for “more incentive” would be pointless, contradicting the statement. Why Other Options Are Wrong: Only I or only II: incomplete rationale for reform.Either: insufficient.Neither: contradicts the call for amendment. Common Pitfalls:Confusing “improper” with “illegal.” Here “not proper” means not adequate or effective. Final Answer:Both Assumption I and II are implicit.

Statement — The income-tax rules need to be amended so that people have greater incentive to declare their actual wealth. Assumptions — I. The current income-tax rules are inadequate or sub-optimal. II. Some people do not declare their actual wealth under the present rules.

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