Question

Short answer type questions:
Explain the 'economic stability' objective of a governmnet budget.

Answer 1

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.