5 ECONOMIC IDEAS 1. Self-interest can improve society and the economy - The idea that self-interest can improve society is basically Adam Smith’s famous invisible hand . it means that even philanthropy is generated by self-interest: People give because they enjoy helping others, so both givers and the people they help are better off. 2. Economic growth relies on innovation - The only way to have sustained economic growth and widespread increases in living standards is to invent more efficient technologies that allow people to produce more from the limited supply of labor and physical resources. Societies should promote education and set up institutions such as patent rights, competitive markets, and copyright laws to promote innovation and increases in efficiency. 3. International trade is a good thing for the economy - Opening your country to international trade means opening your country to new ideas and innovations. Competition causes local businesses to innovate to match the best offerings of companies from around the world. 4. Government can provide public goods - Economists view the existence of public goods as one of the most important justifications for government intervention in the economy. Private firms can provide goods and services only if they can at least break even doing so. 5. Preventing economic inflation is easy - High rates of inflation are caused by the government’s increasing the money supply too rapidly. A growing economy
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