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Distinguish between classical and modern economist

Within economics, there are two distinct schools of thought: classical economics and contemporary economics. Adam Smith, David Ricardo, and John Stuart Mill, among others, all contributed to what is now known as “classical economics” in the late 18th and early 19th centuries. On the other hand, the term “modern economics” refers to the body of thought that has developed since the middle of the twentieth century.

The idea of laissez-faire, held by classical economics, says that the government should stay out of the economy. They stressed the significance of people acting in their own self-interest and the value of market mechanisms in setting prices and distributing resources. Long-term economic stability was another major concern for classical economists, who put faith in a “invisible hand” to direct markets.

But contemporary economists have several ideas and models to explain economic occurrences. They have factored in ideas like imperfect knowledge, externalities, and market failures. When it comes to fixing market inefficiencies and bolstering economic growth, modern economics lays a heavier focus on the part played by government.

Furthermore, new schools of thought have emerged in contemporary economics, such as Keynesian economics, which highlights the significance of aggregate demand and government expenditure in promoting economic expansion. Behavioural economics combines human psychology into economic study, while monetarism emphasises the importance of money supply in shaping economic activity as two other schools of thought.

While classical economics provided the groundwork for contemporary economic analysis, the field has since advanced to take into account a larger variety of elements and adapt to the complexity of the modern world.

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