Ch. 2 study guide

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University of Toronto Mississauga
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Ch.2 -resource development: the study of how to increase resources and the creation of the conditions that will make better use of those resources. ex. Recycling -Adam Smith: Adam Smith was one of the first people to imagine a system for creating wealth and improving the lives of everyone. Rather than believing that fixed resources had to be divided among competing groups and individuals, Smith envisioned creating more resources so that everyone could become wealthier. The year was 1776. Adam Smiths book An Inquiry into the Nations and Causes of the Wealth of Nations (simply called The Wealth of Nations) was later considered the foundation of the study and understanding of the newly developing capitalist industrial society. Adam Smith believed that freedom was vital to the survival of any economy, especially the freedom to own land or property and the freedom to keep profits from working the land or owning a business. He believed that people will work hard if they have incentives for doing sothat is, if they know that they will be rewarded. He made the desire for improving ones condition in life the basis of his theory. According to Smith, as long as farmers, laborers, and business people (entrepreneurs) could see economic rewards for their efforts (i.e., receive enough money in the form of profits to support their families), they would work long hours and work hard. As a result of these efforts, the economy would prosperwith plenty of foods and all kinds of products available to everyone. -Invisible Hand: a phrase coined by Adam Smith to describe the process that turns self- directed gain into social and economic benefits for all. -Capitalism: an economic system in which all or most of the factor of productio
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