Musgrave’s three functions of government do NOT include:
Options
AAllocation
BDistribution
CStabilization
DMaximization
For any discrepancies in this question, email contact@cadada.in
Public FinancePYQ - Nov 2018 (Inter)Question 136 of 20
All Questions Correct Answer
✅ Option d — Maximization
All Options:
- AAllocation
- BDistribution
- CStabilization
- DMaximization
Detailed Solution & Explanation
To answer this question, we need to understand Musgrave's three functions of government.
• The first step is to recall that Musgrave's functions are based on the role of government in the economy, which includes allocation, distribution, and stabilization.
• Allocation refers to the government's role in providing public goods and services, distribution refers to the government's role in redistributing income and wealth, and stabilization refers to the government's role in maintaining economic stability.
• The next step is to analyze the options given and identify which one does not belong to Musgrave's three functions.
• Maximization is not one of Musgrave's three functions, as it is more related to the concept of maximizing welfare or profit, which is not a primary function of government according to Musgrave.
• Allocation and distribution are incorrect options because they are indeed two of Musgrave's three functions, and stabilization is also a function of government, which leaves maximization as the correct answer.
• Therefore, the correct answer is the option that mentions maximization, as it is not one of Musgrave's three functions of government.
About This Chapter: Public Finance
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Fiscal Policy, Budget, Market Failure
This chapter deals with government finances — how the government earns (taxation) and spends (expenditure) money. Key topics include Fiscal Policy, types of taxes (Direct and Indirect), the Union Budget, Public Debt, and the concept of Market Failure and how government intervention corrects it.
View Official ICAI SyllabusExam Strategy Tip
Focus on the difference between Revenue and Capital items in the budget. Understand Fiscal Deficit and its implications. Tax-related MCQs are commonly asked.
More Questions from Public Finance
Ready to Master Public Finance?
Practice all 20 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.
Start Practicing — It's Free