State three objectives of a government budget

Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Short Questions – Q.1 State three objectives of a government budget

Solution:-

• Reducing Inequalities in Income: – Government through its budget seeks to reduce the divide between the rich and the poor. This is done by increasing taxes on the rich and increasing government’s expenditure on the welfare schemes for the poor. Such a policy, reduces disposable income of the rich and results in increased quality of life of the poor, thereby reducing the effects of income divide.
• Reducing Regional Disparities: – Government budget aims at reducing disparities with regards to development between different parts of country. This is done by promoting trade and commerce in the backward areas of the country by increasing government expenditure, providing tax holidays, subsidies etc.
• Employment Generation: – Government through its budget aims at providing and increasing employment opportunities for the citizens of the country. Governments expenditure on various projects like railways, bridges, flyovers provide employment to skilled and unskilled labour. Also, government in its budget introduces various schemes like Mahatma Gandhi national rural employment guarantee act (MNREGA), Pradhan Mantri Rojgar Yojana (PMRY) in order to provide employment to its citizens.

Short Questions – Sandeep Garg Macroeconomics Class 12 Solutions Government budget and the Economy

• State three objectives of a government budget
• Explain objective of stability of prices of government budget
• How can a government budget help in reducing inequalities reducing inequalities of income? Explain.
• Explain the ‘allocation of resources’ objective of Government budget.
• What is a government budget? Name two sources each of non-tax revenue receipts and capital Receipts.
• What is a government budget? Give the meaning of: (a) Revenue deficit; (b) Fiscal deficit.
• What are the two broad divisions of receipts of the government budget? Name two sources of each kind of receipt.
• Define tax revenue. What are the two kinds of tax revenues? Give two examples of each.
• Distinguish between Direct Tax and Indirect Tax
• Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes
• Distinguish between revenue receipts and capital receipts
• Give meanings of Capital receipts and Revenue receipts with an example of each.