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The intervention of the government either to expand demand or reduce it, is the function of government budget.

  • A.Allocation
  • B.Redistribution
  • C.Stabilization
  • D.Price management

Answer: C

The intervention of the government either to expand or to reduce demand in the economy, to control inflation or unemployment, is the stabilisation function of the budget, as set out by Musgrave. The allocation function deals with public goods, and redistribution with income distribution. The answer is stabilisation, option C.

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