IDSB01H3 Lecture Notes - Lecture 4: Opportunity Cost, Investment, Capital Accumulation
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Smith: wealth id the annual flow of goods and services, not bullion. Smith: determinants of wealth: productivity of labour, division of labour, capital accumulation, technology. Increase the wealth of a nation: by increasing the productivity of labour, by increasing technology, labour, k accumulation. Now spe(cid:272)ifi(cid:272)all(cid:455) to i(cid:374)(cid:272)rease la(cid:271)our (cid:455)ou (cid:373)ust (cid:858)i(cid:374)(cid:272)rease de(cid:454)terit(cid:455)(cid:859) Allows the saving of time which is commonly lost in passing one species of work to another. Ricardo agrees with smith key factors to increase wealth. Ricardo states that the essential role of capitalists. Allocate resources to activities that generate the greatest return. But over time capitalists share of surplus shrinks. Ricardo believes that overtime surplus would go to the parasitic landlord and this will lead to a slowdown in economic growth. Ability to produce a good at a lower opportunity cost. Sa(cid:455)(cid:859)s law is that savings will equal investments.