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The function of a government by which it seeks to seek a balance of employment, demand-supply, and inflation, is known as:
  • a)
    Distribution function
  • b)
    Allocation function 
  • c)
    Stabilization
  • d)
    Protection 
Correct answer is option 'C'. Can you explain this answer?
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The function of a government by which it seeks to seek a balance of em...
The correct option is Option C. 
Stabilization policy is a strategy enacted by a government or its central bank that is aimed at maintaining a healthy level of economic growth and minimal price changes. In the language of business news, a stabilization policy is designed to prevent the economy from excessive "over-heating" or "slowing down."
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The function of a government by which it seeks to seek a balance of em...
Stabilization Function of Government

The stabilization function of government refers to the measures taken by the government to maintain stability in the economy. The main objectives of the stabilization function are to achieve and maintain full employment, control inflation, and promote economic growth. This function is usually carried out by using fiscal and monetary policies.

Fiscal Policy

Fiscal policy involves the use of government spending and taxation to influence the economy. When there is an economic slowdown, the government can increase its spending on infrastructure projects, which can create jobs and boost demand for goods and services. The government can also reduce taxes to stimulate spending and investment. Conversely, during an economic boom, the government can reduce its spending and increase taxes to slow down the economy and prevent inflation.

Monetary Policy

Monetary policy involves the use of interest rates and the money supply to influence the economy. When the economy is slowing down, the central bank can lower interest rates, which can encourage borrowing and investment. This can increase demand for goods and services and stimulate economic growth. Conversely, when the economy is overheating, the central bank can raise interest rates, which can reduce borrowing and investment and slow down the economy.

Conclusion

The stabilization function of government is an important aspect of economic management. By using fiscal and monetary policies, governments can maintain stability in the economy and achieve their objectives of full employment, controlled inflation, and sustained growth.
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The function of a government by which it seeks to seek a balance of em...
The govt is taking the necessary steps to help the people.In this process the govt is providing the balanced employment for the people who are graduated and willing to work.
and also the want to improve the demand supply of the goods and commodities.
And also inflation means increasing the cost of goods and commodities in the market.
It is provided all the neccesaries and increasing costs.
So it is called stabilization
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It is often forgotten that globalization, is not only about policies on international economic relationships and transactions, but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and view government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restrictions on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production.Above all, in line with the overall philosophy of reduction in the role of the state, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide by the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance.Q.According to the passage, the basic philosophy of globalization is to

Passage 2After the end of World War II, a pervasive, but unfortunately fallacious, economic perspective took hold. Based on the United States successful emergence from the Depression, the idea that war was good for an economy became fashionable. However, linking the United States economic recovery with its entry into World War II is a prime example offlawed economic thinking.Supporters of the war benefits economy theory hold that a country at war is a country with a booming economy. Industry must produce weapons, supplies, food, and clothing for the troops. The increased production necessitates the hiring of more people, reducing unemployment. More employment means more money in the pockets of citizens, who are then likely to go out and spend that money, helping the retail sector of the economy. Retail shops experience an increase in business and may need to hire more workers, further reducing unemployment and adding to the economic momentum. While this scenario sounds good in theory, it does not accurately represent what truly happens in a war time economy.In reality, the government can fund a war in a combination of three ways. It can raise taxes, cut spending on other areas, or increase the national debt. Each of these strategies has a negative impact on the economy. An increase in taxes takes money out of an individuals hands, leading to a reduction in consumer spending.Clearly, there is no net benefit to the economy in that case. Cutting spending in other areas has its costs as well, even if they are not as obvious.Any reduction in government spending means the imposition of a greater burden on the benefactors of that government spending. Cutbacks in a particular program mean that the people who normally depend on that program now must spend more of their money to make up for the government cuts. This also takes money out of consumers hands and leaves the economy depressed. Of course, a government could go into debt during the war, but such a strategy simply means that at some point in the future, taxes must be increased or spending decreased. Plus, the interest on the debt must be paid as well.Q. Which of the following situations best mirrors the effect that cutting spending in government programs has, as detailed in the passage?

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The function of a government by which it seeks to seek a balance of employment, demand-supply, and inflation, is known as:a)Distribution functionb)Allocation functionc)Stabilizationd)ProtectionCorrect answer is option 'C'. Can you explain this answer?
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