Question

Which of the following correctly matches the budget type with its use?

Options

• Surplus Budget — used to tackle depression/recession; Deficit Budget — used to control inflation

• Deficit Budget — used to control inflation; Balanced Budget — used to tackle recession

• Surplus Budget — used to control inflation; Deficit Budget — used to tackle depression/recession

• Balanced Budget — used to control inflation; Surplus Budget — used to tackle depression

Answer 1

A Surplus Budget, with receipts exceeding expenditure, is used to control inflation by reducing aggregate demand. A Deficit Budget, with expenditure exceeding receipts, is used to tackle depression/recession by boosting aggregate demand.