Please explain the mening of line vk macro economics 2016 pg no 250 point 3 (allocation of resources) ' - Economics - Government Budget and the Economy

Question

Please explain the mening of line vk macro economics 2016 pg no 250
point 3 (allocation of resources) ' these econimics fail to account
for externalities of production which often lead to loss of social
welfare on account of environment degradation'

Vaishali Nebhwani · Accepted Answer

Dear student,

It means that when the Government reallocates the resources of
private sector through its budgetary policy in order to maintain a
balance between social and economic objectives, due to this the
private sector lacks sufficient incentives which result in losses
In order to create a market, the private sector makes a choice that
creates social, economic and environmental side effects

Regards

Please explain the mening of line vk macro economics 2016 pg no 250 point 3 (allocation of resources). ' these econimics fail to account for externalities of production which often lead to loss of social welfare on account of environment degradation'.