The document discusses the three main economic functions of government: allocation, distribution, and stabilization. The allocation function refers to the government making public goods like roads, parks, and national defense available to all citizens. The distribution function aims to reduce inequality in income and wealth through government activities. The stabilization function involves the government working to maintain stable economic growth and low unemployment.

2. Inthemodern world, Governmenthasto performseveralresponsibilities.
Maintenanceof Law &Order
Protection ofthe life of people and property
Administration of justice
Providing basicinfrastructure
Promotion of public welfare etc
In addition to these, the Government has to perform three economic
functions

3. Governmenthas to performthreeeconomicfunctions
Allocation Function
Distribution Function
Stabilisation Function

4. Allocation Function
AllocationFunctionoftheGovernmentrefers tomakingavailabletoall…
PublicGoods
ArrangingResourcesforthesamepurposeanddistributingthem effectively amongpeople
ItisimportanttodistinguishbetweenPublicGoodsandPrivateGoods

5. PublicGoods
Public goods are those which can be used by all people. None one can be excluded from the
consumptionofthesegoods.
Examples…
Roads
Parks
StreetLights
PublicAdministration
Defense
Hospitals
Courts

6. PrivateGoods
Goods like food articles, clothes, consumer durables like television, vehicles, cinema, travel
facilitiesetcthatwecanbuyfromthemarketforapricearecalledprivate goods becausethey
areboughtforprivateuse.

7. Allocation Function
The function of the Government to supply public goods to
thepeopleiscalledAllocationFunction

8. Distribution Function
Distribution Function refers to the activities of the Government to reduce inequality in income
andwealth. Market