Question : The stabilisation function of the government budget mainly includes _____.
Option 1: allocation of resources.
Option 2: intervention to expand or reduce the demand.
Option 3: production of public goods.
Option 4: distribution of income in society in a fair way.
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Correct Answer: intervention to expand or reduce the demand.
Solution : The correct answer is the intervention to expand or reduce the demand .
The goal of a stabilisation policy is to contain wild fluctuations in the GDP (gross domestic product) of the country and to restrain sharp increases or decreases in it. Healthy employment rates typically follow the stabilisation of these factors. The role of governments is to set the direction and pace of the nation's economic activity. In addition, it must guarantee price stability, strong employment, and steady growth. Governments must also modify spending and tax rates to change the pace of economic growth.
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