Government Budget and the Economy

Government budget and economy constitute a significant section for the class 12 Macroeconomics as indicating the state. It was stated that apart from the private sector, there is the government which plays a very important role. An economy in which there is both the private sector and the Government is known as a mixed economy.

There are many ways in which the government influences economic life. In this chapter, we will limit ourselves to the functions which are carried on through the government budget.

Also Check: Important Questions for Government Budget and the Economy

What is Government Budget?

A government budget is an annual financial statement depicting item wise approximates of

expected revenue and foreseen expenditure during a fiscal year.

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

Also Read: What are the Objectives of Government Budget?

The above mentioned is the concept that is explained in detail about Government Budget and the Economy for the class 12 Macroeconomics. To know more, stay tuned to BYJU’S.

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