1. How did Adam Smith define “the Wealth of Nations”? 2. What, according to Adam
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Question
1. How did Adam Smith define “the Wealth of Nations”?
2. What, according to Adam Smith, was the fundamental mistake made by Mercantilists such as Sir James Steuart?
3. Adam Smith was one of the first economists to think about the problem of measuring prices over time. Answer the following questions in the space provided.
A. In 1950 the cost of a new car was typically $1,500. If the wage of an unskilled worker was about $1.25 in 1950 and !2.00 today. What would be the price of the typical new car from 1950 in today’s dollars?
B. Why did Smith focus on the wage of unskilled workers?
Explanation / Answer
And 1 - The Wealth of Nations is the name of the famous book by Scottish economist and philosopher Adam Smith. It was published in 1776. At the time of first publications, the Wealth of Nations was well received by academic and in highly educated circle. The Wealth of Nations is actually six books, written by Smith. In this book Smith attacked government intervention in the economy and provided a blueprint for free market and free trade. These two principle eventually would become the Hallmark of modern capitalism.
The Wealth of Nations and important work of eeconomic and social theory by Adam Smith, it's full title was inquiry into the Nature and causes of the wealth of Nations. In this he analysis the relationship between work and the production of the nation s wealth. Smith delved into why Nations were more successful than others. The basic fundamental of modern eeconomic was found here, from supply and demand to a definition of wealth. He discussed the division of labor. Smith became known as father of modern economics because of his book.
And 2- Historians have favoured different concepts of mercantilism not only in the shift of eeconomic science but also because they have held explicitly or implicitly, different opinions on how economic ideas are formed and of the role they have played. He was already speaking of the obstacles which stood in the way of capital accumulation in feudal society.
However, Adam Smith defended the system, in direct contradiction to the physiocrats, he insisted that the mercantile system in contrast to the agricultural system had managed to achieve it's declared purpose of promoting the favoured forms of eeconomic activity, commerce and industry, by channeling into them a larger portion of the capital of the society.
And 3- As a research on income inequality, low skilled workers employment opportunities have declined.they suggest that along with housing and financial markets crises, these forces have increased the sensitivity of low skilled workers employment to increase in the minimum wage. Concluded by emphasising that the minimum wage is one among many policies that seek to improve low skilled workers income. Most the Earned Income Tax Credit has been used for this purpose, and to great effect for several decades. It recommend it as a tool for increasing of low skilled workers. By supplementing income without burdening employers, it has meaningful offset some of the inequality inducing trends.
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