Question

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

Answer 1

The government expenditure on producing public goods increases the welfare of the nation. Through the budgetary policy, the government can reallocate resources so that social and economic objectives can be met in the following ways:

i. The government ensures productive expenditure to maximise the welfare of the nation with minimum level of profit.

ii. The government regularises the activities of the private sector to provide social benefit to the poor.