Question

1. How do economists define a nation’s wealth? Be as specific as possible, and explain why each component is included and why others that might seem appropriate really are not.

Answer 1

Firstly, we should be clear with the concept that what is nation's wealth? Its the assest that is hold by the nation's economy. Now if we discuss about how economists define nation's wealth everyone have their own perspective and perception.

"Wealth is not without its advantages" said by John Galbraith.

National Income was first calculated by Economists W. Petty in 1664.

Adam Smith is known as the Father of Economics. He regard economics as a science of wealth. He published a book"Wealth of Nations" in 1776.

According to Adam Smith:-

'The great object of the political Economy of every country is to increase the riches and power of that country'. He didnot beleive in the conception that nation's wealth lie in the accumulation of precious metals like gold and silver.

" Nation's wealth may be defined as those goods and services which command value-in- exchange. Economics is concerned with the generation of wealth of nations".

For Marshall nation's wealth lied in the human welfare. That is according to him money can never be a measure of welfare.

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Measurement of Nation's wealth in the capitalist countries is made a different impact.

-According to Marxist theory, Nation's wealth is defined as the "objectivization of human labor" .

The important components of nation's wealth are-

1.Material Assets.

2.Physical wealth.

3.Consumption level.

4. Production level.

Both human and nature force plays an important role in determining nation's wealth. Each component is inter dependent and it will be impossible to reach the point of calculation. Factors like Labor, capital etc minute factors are added with the aggregate of the Nation's data of economy and contribution of each sector to economy.