Question : Policies of Surplus budget during inflation is a part of which objective of government budget?
Option 1: Economic growth
Option 2: Economic Stability
Option 3: Reducing Regional Disparities
Option 4: Reallocation of Resources
Correct Answer:
Economic Stability
Solution : The correct answer is (b) Economic Stability.
Policies of surplus budget during inflation are a part of the objective of achieving economic stability in the government budget. Economic stability refers to maintaining stable economic conditions, such as stable prices, low inflation, and a balanced economy. During times of inflation, when there is an increase in overall prices, a surplus budget policy can be used to help curb inflationary pressures and stabilize the economy.
A surplus budget involves the government spending less than it collects in revenue, resulting in a budget surplus. By reducing government spending or increasing taxes, the government aims to decrease aggregate demand in the economy, which can help counteract inflationary pressures. The surplus budget policy is a tool used to manage the overall stability of the economy and maintain control over inflation.
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