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Classical School of Thought - Adam Smith

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Classical School of Thought - Adam Smith

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Questions and Answers

What principle explains how individuals acting in self-interest can benefit society?

Planned economy

Invisible hand (correct)

Market regulation

Collective bargaining

In Adam Smith's view, what role does competition play in economic systems?

It prevents efficient resource allocation.

It fosters dependency on government intervention.

It leads to monopolies dominating markets.

It serves as a mechanism for efficient resource allocation. (correct)

Which aspect of human nature does Smith identify as critical for economic prosperity?

Inherent reluctance to engage in commerce

Desire for freedom and self-expression (correct)

Innate altruism and generosity

Capacity for cooperative behavior

What does Smith imply about market forces in terms of resource allocation?

Market forces can efficiently allocate resources. Signup and view all the answers

How does the concept of naturalism relate to Smith's economic theories?

It highlights that economic structures emerge spontaneously. Signup and view all the answers

What critique might be directed at Smith's notion of self-interest in economic behavior?

It overlooks the potential for exploitation and inequality. Signup and view all the answers

What long-term impact did Smith's ideas have on economic thought?

They influenced later economists and remain relevant today. Signup and view all the answers

Which statement best encapsulates Smith's view of the relationship between individual actions and societal well-being?

Individuals acting in their self-interest can inadvertently enhance societal well-being. Signup and view all the answers

Study Notes

Classical School of Thought

Adam Smith's philosophy is based on naturalism
It posits that institutions emerge spontaneously; individuals act naturally, pursuing their self-interest, leading to a beneficial societal outcome
Smith believed that individuals' self-interest, combined with competition, leads to efficient resource allocation within the economy.
Smith's theory emphasized the natural order and believed that human capacities, when allowed to act freely, would result in positive developments.
Smith's ideas focused on the natural order of the economy, emphasizing the efficient allocation of resources through competition.
Naturalism posits that natural societal order is efficient

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Description

Explore the key concepts of the Classical School of Thought, focusing on Adam Smith's philosophy. This quiz covers Smith's views on naturalism, self-interest, and the spontaneous emergence of institutions. Understand how competition leads to efficient resource allocation within the economy.