ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Instead, Smith proposed that the wealth of a nation consisted of both farm output and manufactured goods along with the labor it took to produce them. To increase its wealth, Smith argued, a nation needed to expand its economic production.

Detailed explanation-2: -Often referred to as the Father of Economics, Smith explained the concept of supply and demand as an “invisible hand” that naturally guides the economy. According to Smith, the invisible hand is the automatic pricing and distribution mechanisms in the economy.

Detailed explanation-3: -The central thesis of Smith’s The Wealth of Nations is that our individual need to fulfill self-interest results in societal benefit. He called the force behind this fulfillment the invisible hand.

Detailed explanation-4: -Key Takeaways Smith’s writings were studied by 20th-century philosophers, writers, and economists. Smith’s ideas–the importance of free markets, assembly-line production methods, and gross domestic product (GDP)–formed the basis for theories of classical economics.

Detailed explanation-5: -It provided the foundation for economists, politicians, mathematicians, and thinkers of all fields to build upon. Irrespective of historical influence, The Wealth of Nations represented a clear paradigm shift in the field of economics, comparable to what Immanuel Kant’s Critique of Pure Reason was for philosophy.