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Theories of Economic Policy

Theories of Economic Policy - Theories of Economic Policy ,...

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Theories of Economic Policy In developing an economic policy, government officials rely on the recommendations of economists  who typically base their analyses on theories of how the economy works or should work. As might be  expected, economists often disagree on the cause of a stock market decline or the best solution for  curbing inflation.  Laissez-faire economics The first, and for a long time the only, widely accepted economic theory was the  laissez-faire   theory  proposed by Adam Smith in his  Wealth of Nations  (1776).  Laissez-faire   roughly translates as "to  leave alone," and it means that government should not interfere in the economy. This theory favors  low taxes and free trade, and it strongly holds that the market is self-adjusting — whatever happens  will be corrected over time without the help of the government.  Keynesian economic theory
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