Adam Smith's Economic Analysis

Adam Smith was born and raised in Kirkcaldy which is a town in Edinburgh. His date of birth is unknown although he was baptized on June 5th, 1723. Smith attended the University of Glasgow in 1737. Years later, after giving a number of lectures at the university of Glasgow, he got elected chair of logic at the University of Glasgow in 1751. When the equivalent position for moral philosophy became available that same year, he was elected to the place. This resulted in him doing a set of other things in the same field and which then led to him starting to get interested in the field of economics. He published a range of books and made his first appearance with the Theory of Moral Sentiments. Later on he published another book An Inquiry into the

People said it was not easy determining goods and services’ quality. They also thought that there should be some sort of law toward trade. (The 'invisible hand' has an iron grip on America. (2014, August 13)) Also, in order for the “invisible hand” to work, customers have to actually know what they desire so that the provider is able to produce it. (The 'invisible hand' has an iron grip on America. (2014, August 13)) Smith’s theory has been effective and has helped the economy move forward and progress a lot. There are free trade agreements all over the globe, for example NAFTA, that support both Smith’s view but also fulfil the people's wishes of there being some sort of

As most people know and Keynes stated, people spending money will boost the economy. He believed that the circle flow of income was important to economic success because more income would lead to more spending. To understand his theories you need to understand that the true measure of people's prosperity can not be measured by physical assets but it’s national income. The national income is the total of all individual incomes in a country. When your savings are invested and there is more flow, there will be more capacity for goods and services this creates jobs for people and greater prosperity.

Many people criticized Keynes’ theories because it was hard to understand for people that these could work and make a difference. He very often got criticized because predicting output gap was very difficult. In keynesian economics the assumption is made that it is possible to know how much demand needs to be increased in order to be able to deal with output gap. When a economy has not been in equilibrium it has been mainly because of government policy mistakes. (Pettinger, T. (2012, November 28)) Keynes did not have enough evidence to prove that government intervention is a positive