Economics · Economy
Which of the following statements regarding the economic objectives and stabilization functions of a public budget is INCORRECT?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1One of the core objectives of a public budget is to maintain price stability by utilizing deficit reduction strategies to limit demand-pull inflationary pressures in the economy.
- 2The budget promotes long-term economic growth by prioritizing capital expenditure on infrastructure projects, which serves to increase the productive capacity of the economy over time.
- 3Managing the nation's balance of payments is a budgetary objective that involves the use of tariff policies to promote exports and encourage the substitution of imports with domestic production.
- 4To revive an economy suffering from deficient aggregate demand and high unemployment during a recession, the stabilization function recommends adopting a contractionary fiscal stance characterized by increased taxes and reduced spending.✓
Correct answer
To revive an economy suffering from deficient aggregate demand and high unemployment during a recession, the stabilization function recommends adopting a contractionary fiscal stance characterized by increased taxes and reduced spending.
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