Question

Steps taken through the government budget can influence

• A. Inequalities
• B. Allocation of resources
• C. Inflation
• D. All of these

Hint:

The budget's allocation, distribution and stabilisation functions cover resources, inequality and inflation together.

Answer 1

The Correct Option is D

Step 1: Understanding the Question:
The government budget performs three classic objectives, following Musgrave's classification: allocation, distribution, and stabilisation.

Step 2: Why option D is correct:
Through taxes, subsidies and public spending the budget can (i) reallocate resources toward merit/public goods (allocation), (ii) redistribute income via progressive taxes and transfers to reduce inequalities (distribution), and (iii) manage aggregate demand to control inflation or deflation (stabilisation). All three are genuine budget functions.

Step 3: Why options A, B and C are each individually wrong:
Picking only one of inequalities, allocation of resources, or inflation ignores that the budget simultaneously performs all three functions — none of them alone is the complete answer.

Final Answer:
The budget can influence all of these: inequalities, resource allocation, and inflation.