Explain the objective of stability of prices of government budget. Or Explain the role of government budget in controlling inflationary and deflationa
Explain the objective of stability of prices of government budget.
Or
Explain the role of government budget in controlling inflationary and deflationary tendencies .
Or
Explain how government budget can be helpful in bringing economic stabilisation in the economy .
1 Answers
To control prices, economic stability in maintained by government through changing direction of its revenue and expenditure in budget.
To check inflation
Government initiates to reduce the level of aggregate demand by reducing money supply in the economy. It is done by
Increase taxation
Increasing public debt
Reducing deficit financing ( printing new currency )
Reducing public expenditure
To check deflation
Government initiates to increase the level of aggregate demand by increasing money supply in the economy. It is done by
Decreasing taxation
Decreasing public debt
Increasing deficit financing ( printing new currency )
Increasing public expenditure.