Question

Short answer type questions:
Explain how government can influence allocation of resources through government budget.

Answer 1

Social welfare often suffers as the market economies do not produce enough of public goods which satisfy collective needs of the society and fail to account for externalities of production which often lead to loss of social welfare on account on account of environmental degradation.
The government budget works towards enhancement of social welfare and economic development through redistribution of income and resources, through collection of taxes and government spending on provision of public and welfare goods.