Which 19th-century situation best represents Adam Smith's ideas on how the "invisible hand" of the market works?A.Large corporations made enormous profits under capitalist economic systems.B.Poor citizens in capitalist countries frequently faced extremely harsh lifestyles.C.Most middle-class citizens either became extremely poor or wealthy under capitalism.D.Countries that adopted capitalism were able to continue practicing mercantilism.SUBMITarrow_backPREVIOUS
Question
Which 19th-century situation best represents Adam Smith's ideas on how the "invisible hand" of the market works?A.Large corporations made enormous profits under capitalist economic systems.B.Poor citizens in capitalist countries frequently faced extremely harsh lifestyles.C.Most middle-class citizens either became extremely poor or wealthy under capitalism.D.Countries that adopted capitalism were able to continue practicing mercantilism.SUBMITarrow_backPREVIOUS
Solution
Adam Smith's concept of the "invisible hand" refers to the idea that individuals pursuing their own self-interest can lead to benefits for the economy as a whole. This concept is a fundamental part of capitalist economic theory.
Looking at the options:
A. Large corporations made enormous profits under capitalist economic systems. B. Poor citizens in capitalist countries frequently faced extremely harsh lifestyles. C. Most middle-class citizens either became extremely poor or wealthy under capitalism. D. Countries that adopted capitalism were able to continue practicing mercantilism.
Option A seems to best represent Smith's ideas. In a capitalist system, corporations are free to pursue profits. The competition that results is supposed to regulate the market, with supply and demand determining prices. This is the "invisible hand" that Smith referred to.
So, the answer is A. Large corporations made enormous profits under capitalist economic systems.
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Adam Smith FRS FRSE FRSA (baptised 16 June [O.S. 5 June] 1723[1] – 17 July 1790) was a Scottish[a] economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment.[3] Seen by some as "The Father of Economics"[4] or "The Father of Capitalism",[5] he wrote two classic works, The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
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