Economics Adam Smith Capitalism Economics The study of

Economics • The study of choices. – Choosing one thing in exchange for giving

Adam Smith • Was an economist from Scotland • In 1776, wrote Wealth of

Adam Smiths’ Ideas/Beliefs • To make money, produce things that people are willing to

Question • What would Adam Smith recommend that we produce today?

Adam Smiths’ Ideas/Beliefs • Did NOT believe that the government should control economy. •

Question • What might Adam Smith think about the influence that the government currently

Adam Smith • Smith’s ideas go by the name capitalism • Capitalism - most

Capitalism • Capitalism also includes… 1. People can decide how to spend their income

Capitalism 3. Companies can compete with others • Capitalism allows personal freedom and provides

Question • Is the policy of capitalism used everywhere in the world? • If

People and Economy • Individuals influence the economy - can decide their job, how

Market • Market- place where people buy and sell goods • Prices are determined

Question • What happens if people are not buying products and not investing money

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Economics Adam Smith & Capitalism

Economics • The study of choices. – Choosing one thing in exchange for giving up on something else. – The study of scarcity, how to allocate limited resources. – Question of money, how to manage it, etc.

Adam Smith • Was an economist from Scotland • In 1776, wrote Wealth of Nations - Capital is available for investment - Capital can produce wealth - Money invested or lent produces wealth • Founder of Modern Economics

Adam Smiths’ Ideas/Beliefs • To make money, produce things that people are willing to buy • Businesses create jobs, which leads to a large national income • Free trade and an economy, if controlled, would allow everyone to progress.

Question • What would Adam Smith recommend that we produce today?

Adam Smiths’ Ideas/Beliefs • Did NOT believe that the government should control economy. • Hands off government policy towards business

Question • What might Adam Smith think about the influence that the government currently has on businesses and the market?

Adam Smith • Smith’s ideas go by the name capitalism • Capitalism - most businesses are privately owned - competition and free market most often determine what will be produced and what price it will sell

Capitalism • Capitalism also includes… 1. People can decide how to spend their income (money) 2. Companies can choose which goods and services to produce and how much to charge

Capitalism 3. Companies can compete with others • Capitalism allows personal freedom and provides a high standard of living.

Question • Is the policy of capitalism used everywhere in the world? • If not, then where is it not used?

People and Economy • Individuals influence the economy - can decide their job, how much money they want to save and invest • Economy grows when it increases its production 1. Growth requires investments

Market • Market- place where people buy and sell goods • Prices are determined by supply (how much) and demand (how many) and competition

Question • What happens if people are not buying products and not investing money in the stock market?