Which best summarizes the philosophical difference between economists john maynard keynes and adam smith? keynes said government was the key to solving economic issues

General
1

which best summarizes the philosophical difference between economists john maynard keynes and adam smith? keynes said government was the key to solving economic issues, while smith believed government should take a hands-off approach. smith said government was the key to solving economic issues, while keynes believed government should take a hands-off approach. smith believed in an invisible hand with which government pushes the economy, while keynes did not agree with this idea. keynes believed in an invisible hand with which consumers push the economy, while smith did not agree with this idea.

2

Which best summarizes the philosophical difference between economists John Maynard Keynes and Adam Smith? Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach. Smith said government was the key to solving economic issues, while Keynes believed government should take a hands-off approach. Smith believed in an invisible hand with which government pushes the economy, while Keynes did not agree with this idea. Keynes believed in an invisible hand with which consumers push the economy, while Smith did not agree with this idea.

Answer:
To understand the philosophical difference between John Maynard Keynes and Adam Smith, it’s essential to grasp their foundational economic theories and principles.

  1. Adam Smith:

    • Invisible Hand: Adam Smith is famous for his concept of the “invisible hand,” where he argued that individual self-interest in a free market leads to economic prosperity and efficiency. This principle suggests that when individuals pursue their own interests, they inadvertently contribute to the overall economic welfare of society.
    • Laissez-faire: Smith believed in minimal government intervention in economic affairs. He argued that the economy should be driven by the natural forces of supply and demand. Government intervention should be limited to maintaining law and order, enforcing contracts, and protecting property rights.

  2. John Maynard Keynes:

    • Government Intervention: Keynes advocated for active government intervention to manage economic fluctuations and combat unemployment. He argued that during periods of economic downturns, the government must step in to stimulate demand through fiscal policies such as increased public spending and cutting taxes.
    • Keynesian Economics: Keynesian economics suggests that total spending in the economy (aggregate demand) is the primary driver of economic performance and employment. Therefore, during a recession, when private sector demand is insufficient, the public sector must engage in deficit spending to boost economic activity.

Philosophical Difference:

  • Keynes said government was the key to solving economic issues: Keynes believed that government intervention is crucial to smooth out the business cycle’s booms and busts and to ensure full employment and economic stability.

  • Smith believed government should take a hands-off approach: Smith advocated for a laissez-faire approach where the government should play a minimal role in economic activities, allowing market forces to regulate themselves.

Therefore, the best summary of their philosophical difference is: Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.

Final Answer:
Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.