Page 41 - DECO402_Macro Economics

Macroeconomic Theory

Notes Using such a evaluation method, Nordhaus and Tobin is United States of America in 1965 estimated
MEW that was 1200 Billion dollar which was double to GNP of that year. In the period of 1929-65 the
estimation of per person MEW was 1.1 Percent annually, whereas precipitate GNP estimated was
1.7 Percent. There estimation expresses clearly the during this period in America economic welfare
increase magnificently.
But form above discussion it should not be concluded that the concept of MEW does not substitute.
It is most supplementary of GNP which economic welfare including with GNP non- market activities
are included.

Self Assessment
State whether the following statements are true or False:
7. The changing in the distribution of national income by two types.
8. Rest is an important factor affection society’s welfare.
9. In the estimation of GNP, the quality of life is not included.
10. Externalities have tendency to minimize or maximize welfare also.

3.4 Summary

Economic welfare and national income both are measured is money, due to this reason pigor has
established close connection between these. When national income increase then economic welfare
increases and vice- versa. The effect of national income on economic welfare can be studied by two
methods: first, changing in the size of national income, secondly chancing in the distribution of
national income.

3.5 Keywords

y Regressive – coming below
y Leisure Empty time, rest

3.6 Review Questions
1. The size of national income and distribution system, how effects system of economic welfare,
explained. Give example.
2. Discuss the effects on welfare of changing in size and distribution of National Dividend.
3. Evaluate the views of economic welfare. Clearly it's relations with only counties national
income.
4. In the interest of poor, changing in the distribution of national dividend, whatever their effects
on economic welfare, explained it clearly.

Answers: Self Assessment

1. satisfaction 2. happy 3. total summation
4. (a) 5. (b) 6. (a)
7. True 8. True 9. True
10. True

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