1. Adam Smith & Capitalism
Economics
Adam Smith & Capitalism

2. 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.

3. 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

4. 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.

5. Question
What would Adam Smith recommend that we produce today?

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

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

8. 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

9. 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

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

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

12. 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

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

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