Now, since we say that an economy faces various challenges and an economic system is a man made device, there must be certain criteria too by which we can judge the performance of an economy.
The performance of an economy is judged by four criteria:
1. Efficiency
It means allocative efficiency. An efficient economy is one which produces what people want at least possible cost.
2.Equity
It means fairness of economic outcomes. It implies more equal distribution of income and wealth.
The equity mentioned here is different from the equity markets. There is a difference between equity and equality
3.Economic Growth
It implies an increase in output of an economy.
4. Stability
It refers to the situation in which the national output is increasing with low inflation and full employment* of resources.
* full employment is when everyone gets work at the prevailing wage rates.
There can be full employment with unemployment too.
The performance of an economy is judged by four criteria:
1. Efficiency
It means allocative efficiency. An efficient economy is one which produces what people want at least possible cost.
2.Equity
It means fairness of economic outcomes. It implies more equal distribution of income and wealth.
The equity mentioned here is different from the equity markets. There is a difference between equity and equality
3.Economic Growth
It implies an increase in output of an economy.
4. Stability
It refers to the situation in which the national output is increasing with low inflation and full employment* of resources.
* full employment is when everyone gets work at the prevailing wage rates.
There can be full employment with unemployment too.
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