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why it is possible for the government to maintain a balanced budget while at the same...

why it is possible for the government to maintain a balanced budget while at the same time increasing the equilibrium level of aggregate demand in the economy.

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Ans- Government budget is said to be a balanced budget if estimated government receipts are equal to the estimated government expenditure. Planning a balanced budget helps governments to avoid excessive spending and allows them to focus funds on areas and services that require them the most.

Also, at the same time government aims at increasing the equilibrium level of aggregate demand in the economy so as to increase money supply in the economy. The government spends on various infrastructural and development activities to increase the equilibrium level of aggregate demand in the economy. Also, it raises the purchasing power of the people in the economy.

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