Policies of surplus budget during inflation and deficit budget during deflation helps to maintain ...........in the economy.
Which of the following option fits best in the above blank?
Answer & explanation
Correct answer: option 3
The correct answer is option 3: Economic stability
The policies of a surplus budget during inflation and a deficit budget during deflation are aimed at stabilizing the economy by controlling economic fluctuations. These policies help in managing inflation and deflation to ensure stable economic conditions. A surplus budget helps to reduce inflation by decreasing aggregate demand, while a deficit budget helps to stimulate the economy during deflation by increasing aggregate demand.