Assume a government wants to choose between two programs (A and B). The government wants to know how to decide between these two programs. Elaine, an economic adviser, believes as GDP is a measure of economic well-being, government should only see how differently these two programs affect GDP, and choose the one that increases GDP more. Doug another economic advisor disagree with Elaine, with the knowledge you learned in the class explain why Doug could be disagree with Elaine?
The aim of any government is to maximise overall welfare of its citizens, i.e, Overall Development . One of the method to do so is to increase the GDP which is the economic aspect. Apart from this, the government also needs to ensure that there is non economic growth in the country which involves improved levels of Education, healthcare, standard of living, etc.
Therefore Doug disagrees with Elaine’s idea of government only seeing how differently these two programs affect GDP, and choose the one that increases GDP more. He intends to look at the overall effect of the projects on both economic and non-economic measures.
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