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John Vahaly

In: 21st Century Economics: A Reference Handbook

Chapter 38: Debates in Macroeconomic Policy

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Debates in Macroeconomic Policy
Debates in macroeconomic policy

Modern economics began with Adam Smith's The Wealth of Nations (1776), which established the promotion of rising living standards as the major economic goal. Smith labeled economic thought of his time as Mercantilism, which seemed to place emphasis on the acquisition of money, gold and silver primarily, as the key to prosperity.

The Wealth of Nations integrated eighteenth-century political and economic thinking to present a new framework for economic organization to promote economic well-being. Smith demonstrated that the then prevailing emphasis of government accumulation of specie—gold and silver—was misplaced. For Smith and the following classical school, the correct view of economic progress had nothing to do with money.

Just as in modern views of economic growth, rising living standards depended ...

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