Description
The presenation includes topics like national income, GNP, welfare, sustainable development, national income identity and calculations
National Income and Economic Welfare
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GNP or/and GDP can be some rough measures of Welfare of the Society, but some issues like… Issue of Equity Non inclusion of the services of unpaid labourers Issue of Environmental Degradation (Sustainable Development)
?
? ? ?
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The current National Income of an Economy is generated in such a way that it does not affect the Productivity of the Future Generation Weak Sustainability Strong Sustainability Therefore, the current National Income must be adjusted with the Resource Depletion (Index of Sustainable Economic Welfare, ISEW) ISEW=NDP-(Cost of Environmental Degradation)
Total Supply of the Economy = Total Output Produced in the Economy (Yd) In an Open Economy
In a Two Sector Economy In a Three Sector Economy with Govt.
Household will have the Consumption Demand (Cd) & Firm will keep the rest for further Investment (Id) Thus, the Total Demand is: Cd+Id
Demand for the Output of the Economy by the Govt. (Gd) Thus, the Total Demand is: Cd+Id+Gd
The Residue is sold Abroad, i.e. Export (X) Thus, the Total Demand is: Cd+Id+Gd+X
Ultimatel y
Y d= Cd+Id+Gd+X, but..
In an open economy, all the three sectors (Household, Firm and Govt.) also demand (require) the imported goods. ? Therefore, the total demand of the; ? Household=Cd+Cm ? Firm=Id+Im ? Govt.=Gd+Gm
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?
Thus, the Aggregate Demand of the Economy is: (Cd+Cm)+( Id+Im)+ (Gd+Gm)+X=(Cd+ Id+Gd)+ ( Cm+Im+Gm)+X
Therefore, the Final Identity is: Y = C+I+G+X-M, where, Y=Yd, Cd+ Id+Gd=C+I+G and Cm+Im+Gm=M
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doc_158013053.ppt
The presenation includes topics like national income, GNP, welfare, sustainable development, national income identity and calculations
National Income and Economic Welfare
?
? ?
?
GNP or/and GDP can be some rough measures of Welfare of the Society, but some issues like… Issue of Equity Non inclusion of the services of unpaid labourers Issue of Environmental Degradation (Sustainable Development)
?
? ? ?
?
The current National Income of an Economy is generated in such a way that it does not affect the Productivity of the Future Generation Weak Sustainability Strong Sustainability Therefore, the current National Income must be adjusted with the Resource Depletion (Index of Sustainable Economic Welfare, ISEW) ISEW=NDP-(Cost of Environmental Degradation)
Total Supply of the Economy = Total Output Produced in the Economy (Yd) In an Open Economy
In a Two Sector Economy In a Three Sector Economy with Govt.
Household will have the Consumption Demand (Cd) & Firm will keep the rest for further Investment (Id) Thus, the Total Demand is: Cd+Id
Demand for the Output of the Economy by the Govt. (Gd) Thus, the Total Demand is: Cd+Id+Gd
The Residue is sold Abroad, i.e. Export (X) Thus, the Total Demand is: Cd+Id+Gd+X
Ultimatel y
Y d= Cd+Id+Gd+X, but..
In an open economy, all the three sectors (Household, Firm and Govt.) also demand (require) the imported goods. ? Therefore, the total demand of the; ? Household=Cd+Cm ? Firm=Id+Im ? Govt.=Gd+Gm
?
?
Thus, the Aggregate Demand of the Economy is: (Cd+Cm)+( Id+Im)+ (Gd+Gm)+X=(Cd+ Id+Gd)+ ( Cm+Im+Gm)+X
Therefore, the Final Identity is: Y = C+I+G+X-M, where, Y=Yd, Cd+ Id+Gd=C+I+G and Cm+Im+Gm=M
?
doc_158013053.ppt