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Government Budget and Economy — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsGovernment Budget and Economy4 Marks
Question
Explain the 'economic stability' objective of a government budget.
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Answer

Government can bring in economic stability, i.e. control fluctuation in general price level, through taxes, subsidies and expenditure. When there is inflation, government can reduce its own expenditure When there is deflation, government can reduce taxes and give subsidies to encourage spending by the people.

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