Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 11, Problem 6DQ
To determine
The market economy of China.
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In 1776, Adam Smith ([1776] 1936) published his treatise, An Inquiry into Nature and Causes of the Wealth of Nations , which was taken by many to be a theory of economic growth. Smith, however, was clearly concerned with economic development. The classical school of economic thought, predominantly modeled after Smith, is largely geared toward understanding and explaining economic development. Smith presented a supply driven model of growth, where output was related to labor, land, and capital. Thus, economic growth, which is the increase in output, was related to population growth, investment, land growth, and increases in productivity. According to Smith, society was dependent on the economy’s ability to sustain its increasing workforce. Investment was dependent on the rate of savings. Land growth was dependent on the ability to acquire more land (through conquest) or on the increase in the productivity of existing land. He also believed in the division or specialization of labor as a…
In 1776, Adam Smith ([1776] 1936) published his treatise, An Inquiry into Nature and Causes of the Wealth of Nations , which was taken by many to be a theory of economic growth. Smith, however, was clearly concerned with economic development. The classical school of economic thought, predominantly modeled after Smith, is largely geared toward understanding and explaining economic development. Smith presented a supply driven model of growth, where output was related to labor, land, and capital. Thus, economic growth, which is the increase in output, was related to populationgrowth, investment, land growth, and increases in productivity. According to Smith, society was dependent on the economy’s ability to sustain its increasing workforce. Investment was dependent on the rate of savings. Land growth was dependent on the ability to acquire more land (through conquest) or on the increase in the productivity of existing land. He also believed in the division or specialization of labor as a…
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Economics: Principles & Policy
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