Question

Explain how government budget can be helpful in bringing economic stabilization in the economy.

Answer 1

The government also aims at insulating the economy from major fluctuations (like inflation. unemployment) and business cycles such as boom, recession, depression and recovery. The government through its budgetary policy tries to combat such situations. The major concern of government is to achieve higher economic growth rates while maintaining price and employment stability. This state of economic growth with stability ensures a smooth and efficient functioning of an economy.