Question

a)You meet a special someone after this course, and they figure out that you are now an amateur economist. Then, in a moment when the relationship is starting to take off, the crucial question comes: “I’ve heard a lot about this Adam Smith guy. Why was he so important for modern economics?” What is your answer?

b)What is economics?

c) So, what is macroeconomics?

Answer 1

Adam Smith is father of modern economics. He gave the idea of invisible hand. According to him there is tendency of free markets to regulate themselves by means of self interest, price mechanism, supply, demand, competition. Thus he proved wrong Economists belonging to schools like physioc racy. Through the help of absolute advantage he should all nations can gain from trade and beggar thy neighbour policy is detrimental. Thus he proved mercantalists wrong. He also popularised ideas in a language that people could understand. Other Economists built on his work.. His concept of division of labour led to Modern assembly lines. His ideas changed focus from wealth from land to wealth from specialisation. In short his contribution is tremendous and his work marks beginning of modern economics

B There are many definitions but no one is perfect. As said rightly said economics is what Economists do and that usually involves studying issues relating to production, distribution and exchange of goods

C macroeconomics is study of aggregate economic variables. These aggregates tend to be national. It deals with performance, structure and decision making of the economy as a whole