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Reallocation of resources-Government budget

Describe the Reallocation of resources objective of the government budget.

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Through Budgetary policy the government directs the assigning of resources in a way such that there is a balance among goal or of gain maximisation and social welfare. The Government can give subsidy and reduction in tax rate to motivate investment into regions where private sector initiative is not coming. Production of goods that are injurious to social life is discouraged via heavy taxation.

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