Synopsis of Adam Smith and John Maynard Keynes презентация

Kirkcaldy
1737—University of Glasgow
Studied at Oxford University 1740-1747
Lectured in Edinburgh and Glasgow University between 1748 to 1763.
Author of The Publication “The Wealth of the Nations”

in general
E.g. set up business for profit and create employment for people at the same time.

Believed people were driven by selfishness and this was morally acceptable as this benefited society.

legal system
Defend the country

Believed the government should not interfere except for to provide the following:

Baker

Non-productive

Actors
Teachers
Engineers

value in exchange. See my example below.

Diamonds

Has limited number of uses.
Large value in exchange.

Water

Has many uses
Small value in exchange

income
Certainty– Tax liabilities should be clear and certain
Convenience: Taxes should be collected in a manner convenient for taxpayer
Economy – Taxes should not be expensive to collect and should not discourage business.

the making of a single pin involves eighteen separate operations, which are entrusted to eighteen separate workmen; and the result is, that whereas one man working alone could make perhaps only twenty pins in a day, several men working together, on the principle of division of labour, can make several thousands of pins per man in one day.

Keynes Professor of Economics at Cambridge
Won a scholarship to Eton and later to Kings College Cambridge
Lectured at Kings College from 1908

Employment, Interest and Money - 1936

has slowed down

Unemployment levels are up
Consumer spending is down
Businesses are not making any money

Government decreases taxation
Consumers have more money to spend.
Government spends money by buying services from the market (such as building roads or schools).
Jobs are created.

Result:
More money in the economy and less taxes to pay
Business will now begin to make money again

He did not believe in Laissez-Faire

more income than the amount invested.
The formula for the Multiplier is as follows:
1
1 – MPC + MPM + MPT

by the Central Bank
Settles at a level which brings about equal Supply of and Demand for Money

Supply meant the money in circulation.

Demand meant the reasons why people want to hold onto money rather than invest it.

other.
Savings were greater than the amount that entrepreneurs are willing to invest.
Causes underemployment in the economy.