Match List-I with List-II.
| List-I | List-II | ||
| (A) | Reallocation of resources | (I) | Government intervention to either expand demand or reduce it |
| (B) | Redistribution of Income | (II) | Subsidies on new business setup |
| (C) | Stability function | (III) | Public goods to be provided by government |
| (D) | Employment generation | (IV) | Imposing more tax on high income group |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
The government uses its budget to change what the market alone would give.
| List-I | List-II | Reason |
|---|---|---|
| (A) Reallocation of resources | (III) Public goods to be provided by government | The market cannot provide public goods, such as national defence. So the budget moves resources towards them. |
| (B) Redistribution of Income | (IV) Imposing more tax on high income group | A higher tax on higher incomes changes the shares of income towards a fairer distribution. |
| (C) Stability function | (I) Government intervention to either expand demand or reduce it | Income and employment rise and fall. The government manages demand to correct this. |
| (D) Employment generation | (II) Subsidies on new business setup | A subsidy lowers the cost of starting a business. More new businesses hire more workers. |
NCERT (2026-27): “Redistribution Function of Government Budget …The government sector affects the personal disposable income of households by making transfers and collecting taxes. It is through this that the government can change the distribution of income and bring about a distribution that is considered ‘fair’ by society. … The redistribution objective is sought to be achieved through progressive income taxation, in which higher the income, higher is the tax rate.… Allocation Function of Government Budget Government provides certain goods and services which cannot be provided by the market mechanism i.e. by exchange between individual consumers and producers. Examples of such goods are national defence, roads, government administration etc. which are referred to as public goods.… Stabilisation Function of Government Budget The government may need to correct fluctuations in income and employment.… The intervention of the government whether to expand demand or reduce it constitutes the stabilisation function.…” |