Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

Recently, government introduced a scheme named "Ujjawala Yojna", which focused on providing free LPG connection to the women in rural areas. Which objective of the government budget is being fulfilled?

Options:

Allocation function

Redistribution function

Stabilisation function

None of the above

Correct Answer:

Redistribution function

Explanation:

The correct answer is Option 2: Redistribution function

  • Option 1: Allocation function: This function involves the government allocating resources to produce goods and services that the market may not provide efficiently (e.g., public goods). While the Ujjwala Yojana involves resource allocation, its primary aim is not to directly produce a public good.

  • Option 2: Redistribution function: This function aims to reduce income inequality by transferring income or resources from wealthier individuals or groups to less wealthy ones. Providing free LPG connections to women in rural areas directly targets a disadvantaged group, improving their living conditions and potentially their economic opportunities.This is a clear example of redistribution.

  • Option 3: Stabilisation function: This function focuses on maintaining macroeconomic stability, such as controlling inflation or unemployment. The Ujjwala Yojana, while having some indirect economic effects, is not primarily designed to achieve macroeconomic stabilization.