Question

Short answer type questions:
Explain objective of stability of prices of government budget

Answer 1

One of the objectives of a government is to maintain the economic stability. Economic stability 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.