Question

Govenment raises its expenditure on producing public goods. Which economic value does it reflect? Explain.

Answer 1

When the government raises its expenditure on producing public goods, it has two implications in terms of its economic value. First, it raises the level of social welfare as the people are provided with more of roads, parks, besides better law & order and defence of the country.

Second, it is expected to generate employment, so that the growth process becomes inclusive. More and more people share the benefits of growth, as more and more people are involved in the process of growth.