Adam Smith is usually considered the founder of the field of microeconomics, the branch of economics, which today is concerned, with the behavior of individual entities such as markets, firms and households. In his book "The Wealth of Nations" Smith considered how individual prices are set, studied the determination of prices of land, labour, and capital and inquired into the strengths and weaknesses of the market mechanism. Most important he identified the remarkable efficiency properties of markets and saw that economic benefit comes from the self-interested actions of individuals. All these are still important issues today, and while the study of microeconomics has surely advanced greatly since Smith's day, he is still cited by politicians and economists.
Macroeconomics is another major branch, which is concerned with the overall performance of the economy. Macroeconomics did not even exist in its modern form until 1935; J.M Keynes published his revolutionary "General Theory of Employment, Interest and Money". In his new theory Keynes developed an analysis of what causes of unemployment and downturns, how consumption and investment are determined, how central bank manage money and interest rates, and why some nations thrive while others stagnate.
These are the theories of Smith about microeconomics and Keynes theory about macroeconomics.
Macroeconomics is another major branch, which is concerned with the overall performance of the economy. Macroeconomics did not even exist in its modern form until 1935; J.M Keynes published his revolutionary "General Theory of Employment, Interest and Money". In his new theory Keynes developed an analysis of what causes of unemployment and downturns, how consumption and investment are determined, how central bank manage money and interest rates, and why some nations thrive while others stagnate.
These are the theories of Smith about microeconomics and Keynes theory about macroeconomics.
