Answer:
The government through its budgetary policy can reallocate the resources to different areas. In a mixed economy, the private producers aim towards profit maximization while, the government aims towards welfare maximization. The private sector always tend to divert resources towards areas of high profit, while, ignoring areas of social welfare. In such a situation, the government through its budgetary policy reallocates resources to maintain a balance between the social objectives of welfare maximisation and economic objective of profit maximisation. For example- government levies taxes on socially harmful goods such as tobacco, etc., and provides subsidies for the socially desirable goods such as food grains, kerosene, etc.
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