Podcast
Questions and Answers
What principle explains how individuals acting in self-interest can benefit society?
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?
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?
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?
What does Smith imply about market forces in terms of resource allocation?
How does the concept of naturalism relate to Smith's economic theories?
How does the concept of naturalism relate to Smith's economic theories?
What critique might be directed at Smith's notion of self-interest in economic behavior?
What critique might be directed at Smith's notion of self-interest in economic behavior?
What long-term impact did Smith's ideas have on economic thought?
What long-term impact did Smith's ideas have on economic thought?
Which statement best encapsulates Smith's view of the relationship between individual actions and societal well-being?
Which statement best encapsulates Smith's view of the relationship between individual actions and societal well-being?
Flashcards
Invisible Hand
Invisible Hand
Self-interest leads to societal benefit.
Naturalism (econ)
Naturalism (econ)
Economic systems emerge and organize naturally.
Competition (econ)
Competition (econ)
Essential for efficient resource use.
Self-interest (econ)
Self-interest (econ)
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Efficient Resource Allocation
Efficient Resource Allocation
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Adam Smith's Theory
Adam Smith's Theory
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Human Nature (econ)
Human Nature (econ)
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Impact of Smith's Theory
Impact of Smith's Theory
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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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