Government budget is set to achieve and attain various social and economic objectives in the nation. One such objective is to maintain the economic
stability.
Economic stability refers to a condition where the economy is free of fluctuations and the price level is stable. It can be achieved by correcting the
situations of deficient and excess demand in the economy. Inflationary
gap or excess demand is corrected by reducing government expenditure and
increasing the revenue. Whereas, deflationary gap or deficient gap is
corrected by increasing the government expenditure and reducing the
revenue.