Explain the role of government budget in bringing economic stability.

1.	Explain the role of government budget in bringing economic stability.
Answer» Government budget is used to prevent business fluctuations of inflation and deflation to achieve the objective of economic stability i.e. high level of employment and price stability. The government aims to control the different phases of business cycle i.e. recession, depression, recovery and boom. Policies of surplus budget during inflation and deficit budget during deflation helps to maintain stability of prices in the economy. Economic stability leads to more investment and increases the growth rate and development.

Answer»

Government budget is used to prevent business fluctuations of inflation and deflation to achieve the objective of economic stability i.e. high level of employment and price stability. The government aims to control the different phases of business cycle i.e. recession, depression, recovery and boom. Policies of surplus budget during inflation and deficit budget during deflation helps to maintain stability of prices in the economy.

Economic stability leads to more investment and increases the growth rate and development.

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