Question

Which objective of the government budget is achieved through progressive taxation and transfer payments to bring about a fair distribution?

Options

• Economic growth

• Redistribution of income and wealth

• Re-allocation of resources

• Management of public enterprises

Answer 1

The budget redistributes income and wealth by imposing progressive taxes (higher tax on higher income) and making transfer payments. Together, these instruments alter personal disposable income and bring about a fair distribution of income among the people.