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Explainthe objectiveof stabilityof prices of governmentbudget. Or Explainthe role of governmentbudget in controllinginflationary and deflationary tendencies. Or Explainhow governmentbudgetcan be helpfulin bringing economic stabilisation in the economy. |
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Answer» SOLUTION :To controlprices,economic stabilityin maintained bygovernment through changing direction ofits revenueand expenditure in BUDGET. To check inflation Governmentinitiates to reduce thelevel of aggregatedemand by reducingmoney supplyin theeconomy. It is done by INCREASE taxation Increasingpublicdebt Reducing deficit financing ( printingnew currency ) Reducingpublic expenditure To checkdeflation Government initiates to increase the LEVEL of aggregate demand by increasing money supplyin the economy.It is done by Decreasingtaxation DECREASING public debt Increasing deficitfinancing (printingnewcurrency ) Increasingpublic expenditure. |
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