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Div of L:

Resp for universal Opulence

Industry more DOL

Due to propensity to barter not innate wisdom

Ltd opportunity to exchange less DOL (Limitedby the Extent of the Market)

Origin & use of moneyrisk "the grossest frauds and impositions."

The quantity of real metal in coins has diminished, due to the "avarice and

injustice of princes and sovereign states,"

Real and Nominal Priceof Commodities, or of theirPrice in Labour, and their

Price in Money

Smith's second definition pleases neoclassical economists, who determine value

by the utility that a commodity provides a person rather than cost of production

as do classical economists. Smith argues that the price of any product reflects

wages, rent of land and "...profit of stock," when demand exceeds supply, the

price goes up. When the supply exceeds demand, the price goes down.

different avenues that people can take to generate a larger profit than normal- high profit, secrets

Wages of Labour: Labourers and masters determine wages.. feedback mechanism.. labour wages

only rise as a result of greater revenue disposed to pay for labour. In England, there is more revenue

than in the colonies, but wages are lower, because more workers flock to new employment

opportunities caused by the large amount of revenue so workers eventually compete against each

other as much as they did before. as capital continues to flow to the colonial economies at least at

the same rate that population increases to "fill out" this excess capital, wages there stay higher than

in England. "Labour is the real exchange for commodities".

Stock:interest ratesas an indicator of the profits ofstock

Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective

influence to manipulate the government into doing their bidding. At the time, these were referred to

as "factions," but are now more commonly called "special interests," a term that can comprise

international bankers, corporate conglomerations, outright oligopolies, trade unions and other

groups.

Rent of the Land:

critique ofmercantilismand a synthesis of the emerging economic thinking of Smith's time. The idea

thatprotectionisttariffsserve the economic interests of a nation. large reserves ofgold bullionor

other precious metals are necessary for a country's economic success. This critique of mercantilism

http://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)http://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)http://en.wikipedia.org/wiki/Labour_theory_of_valuehttp://en.wikipedia.org/wiki/Labour_theory_of_valuehttp://en.wikipedia.org/wiki/Labour_theory_of_valuehttp://en.wikipedia.org/wiki/Interest_rateshttp://en.wikipedia.org/wiki/Interest_rateshttp://en.wikipedia.org/wiki/Interest_rateshttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Mercantilismhttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Interest_rateshttp://en.wikipedia.org/wiki/Labour_theory_of_valuehttp://en.wikipedia.org/wiki/Real_versus_nominal_value_(economics)

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was later used byDavid Ricardowhen he laid out hisTheory of Comparative Advantage. free trade

eventually makes all actors better off. This argument is the modern 'Free Trade' argument.

Smith then goes on to say that even if money was set aside from future revenues to pay for the

debts of war, it seldom actually gets used to pay down the debt. Politicians are inclined to spend the

money on some other scheme that will win the favour of their constituents. Hence, interest

payments rise and war debts continue to grow larger, well beyond the end of the war.

http://en.wikipedia.org/wiki/David_Ricardohttp://en.wikipedia.org/wiki/David_Ricardohttp://en.wikipedia.org/wiki/David_Ricardohttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/David_Ricardo