Question

Elaborate the objective of ‘reallocation of resources’ in the government budget.

Answer 1

Answer:

1) Government aims to allocate resources to maintain a balance between maxisation of welfare as well as profits. 2) Private sector of economy usually ignores social welfare. Government budget allows the government to intervene in the economy so as to increase social welfare.

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Answer 2

The reallocation of resources in the government budget is for equal distribution of wealth for the people of the country.

EXPLANATION:

The government can use various methods of taxation, subsidies transfer of funds to bring about a fair distribution of income.

The government can induce the method of progressive income tax where the money is collected in form of taxes from the upper class for the benefit of the lower class in the country to bring about an even distribution of income.