Answer to Question #290460 in Economics for mohamad

Question

compare adam smiths view of a nations wealth with that of modern economists who rely on gross domestic product. Would Adam Smith agree that gross domestic product is the best way to measure a nations economic output?

Answer 1

Smith argued that by giving everyone freedom to produce and exchange goods as they pleased (free trade) and opening the markets up to domestic and foreign competition, people's natural self-interest would promote greater prosperity than with stringent government regulations.

Smith is also known for creating the concept of gross domestic product (GDP) and for his theory of compensating wage differentials.