Question

Explain the role the government can play through the budget in influencing allocation of resources? ​

Answer 1

Answer:

Government can influence allocation of resources through (i) tax concessions, subsidies, etc. and (ii) directly producing goods and services. When there is inflation, government can reduce its own expenditure. When there is deflation, government can reduce taxes and give subsidies to encourage spending by the people.

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Answer 2

Answer:

1) tax concessions, subsidies, etc and 2) directly producing goods and services. when there is inflation, government can reduce its own expenditure. when there is deflating government reduce taxes and give subsidies to encourage spending by the people.

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