a. The “invisible hand” refers to a system where no central authority makes the key economic decisions, but rather decisions are made collectively by all consumers and producers in the economy.
7. Adam Smith wrote that the
a. economic problems of the 18th-century England were caused by free markets.
b. government should control the economy with an “invisible hand.”
c. pursuit of private self-interest promotes the public interest in a market economy.
d. public or collective interest is not promoted by people pursuing their self-interest.
c. Adam Smith recognized that everyone making decisions based on their own self interest would enhance the public interest.
8. Adam Smith, in his book The Wealth of Nations advocated
b. an economy guided by an “invisible hand.”
c. government control of the “invisible hand.”
d. the adoption of mercantilism.
b. Adam Smith advocated a laissez faire stance by government. That is, the government should provide the foundation for a free market system, but should not be a major participant in answering the questions of What, How, and for Whom.