question_answer

Government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects.

Answer:

With the efforts of government in raising educational and health related services, level health and education of poor people is expected to rise. This leads to a rise in human capital formation. Efficiency of workers is expected to rise with improvement in their health and with improvement in their education, skill formation will take place.  Consequently, the level of technology tends scale up due to which more research and innovations are facilitated. Higher level of output is achieved with the same level of inputs. So, Production Possibility Curve (PPC) tends to shift to the right.