How do we evaluate policies: economic efficiency

Economic efficiency is a method of measuring the effectiveness of an economic system in producing desired outcomes, such as the highest level of economic growth and maximum levels of prosperity, while minimising inefficiency and waste. This evaluation measures the effectiveness of policies in achieving economic goals such as full employment, price stability, economic growth and a sustainable balance of payments. Policymakers use economic efficiency to assess whether resources are being used efficiently and to identify where policies are resulting in excessive costs or market failure. The analysis can also be used to evaluate how a policy does or does not contribute to achieving achievable economic goals. This can involve measuring metrics such as total output or rate of growth, corporate profitability, labour productivity, cost savings, public policy outcomes, and resource allocation.