CHAPTER 2 - CHAPTER 2 Economics : The Creation and...

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CHAPTER 2 Economics : The Creation and Distribution of Wealth
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What is Economics ? Economics is the study of how society chooses to employ resources to produce various goods and services and to distribute them for consumption among various competing groups and individuals . * Resource development: is the study of how to use technology to increase the known resources of the world and to create the conditions that will make better use of those resources .
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The Economic Theory of Wealth Creation: Adam Smith 1 - Adam Smith advocated creating wealth through entrepreneurship. Rather than divide fixed resources, Smith envisioned creating more resources so that everyone could be wealthier . 2 - In 1776 Smith wrote a book called The Wealth of Nations in which he outlined steps for creating prosperity . 3 - The Invisible Hand: Adam Smith called the mechanism for creating wealth and jobs an invisible hand which turns self-directed gain into social and economic benefits for all . 4 - Smith is called Father of Capitalism .
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Capitalism Capitalism is an economic system in which all or most of the means of production and distribution are privately owned and operated for profit . 1 - In capitalist countries businesspeople decide how to use their resources and how much to charge . 2 - The driving forces behind wealth creation according to Adam Smith is : A- Freedom to keep the profits and to own land B- Incentives to work long hours and to work hard .
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Capitalism (Contd The disadvantages of capitalism are : 1 - Free market capitalism (capitalism without any government regulations± leads to inequality of wealth 2 - It leads to environmental damage 3 - Some governmental rules and regulations are necessary to protect people and the environment .
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Capitalism (Contd The advantages of capitalism are : 1 - The right to private property 2 - The right to keep all of a business’s profits after taxes 3 - The right to freedom of competition 4 - The right to freedom of choice
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Communism Communism is a system where all economic decisions are made by the state and the state owns all the major forms of production
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CHAPTER 2 - CHAPTER 2 Economics : The Creation and...

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