How can a government budget help in reducing inequalities reducing inequalities of income? Explain.

Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Short Questions – Q.3 How can a government budget help in reducing inequalities reducing inequalities of income? Explain.
“OR”
How can Government budget be helpful in altering distribution of income in an economy? Explain.
“OR”
Explain ‘redistribution of income’ objective 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.

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.