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ECONOMIC THEORY Influence of Enlightenment Thinking Adam Smith ‘The Wealth of Nations’ Objective: Explain how the ideas from the Enlightenment changed economic systems NEW ECONOMIC THEORIES • Applied natural law to economics • Land source of nation’s wealth • Laissez-faire economymeaning let it alone. • The government has little or no control over businesses. • ‘The Wealth of Nations’ ADAM SMITH • Supported the theory of laissez-faire economics • Believed in a free-market economy, supply and demand would determine prices and other economic decisions. • He also believed that while governments should not interfere in economics, they did have a duty to protect citizens and provide public works for the betterment of society. PARTNER QUESTION • Do you agree with Adam Smith’s ideas? Should government have little or no control over businesses? Does supply and demand work? Explain why or why not? REMIND101 QUESTION • Which concept is an application of natural law to the government's role in the economic lives of its citizens? • A. Free markets based on supply and demand • B. Government control to achieve a favorable balance of trade • C. Agriculture based on tenant farming and serfdom • D. Lower taxes on the most privileged groups in society