Question : Which budget should be adopted by government in case of moderate inflation.
Option 1: Deficit budget
Option 2: Surplus budget
Option 3: Balanced Budget
Option 4: Revenue Budget
Correct Answer: Balanced Budget
Solution : The correct answer is (c) Balanced Budget.
A balanced budget means that the government's total revenue equals its total expenditure. In this budget, the government's income from various sources, such as taxes, fees, and other revenue streams, matches its spending on public goods and services, welfare programs, infrastructure development, and other expenditures.
Adopting a balanced budget helps ensure fiscal discipline and stability in the economy. In the context of moderate inflation, a balanced budget helps prevent excessive government spending, which can contribute to inflationary pressures. By aligning revenue and expenditure, the government avoids creating additional demand in the economy, which can potentially exacerbate inflation.
