10 Questions
According to Adam Smith's Wealth of Nations, what is the basic tendency of humans?
To truck, barter, and exchange
According to Adam Smith, what is the result of laissez-faire view of government in relation to the economy?
Minimum role for government; maximum for market/private enterprise
According to Adam Smith, what is the worst shame in economic terms?
Bankruptcy
According to Adam Smith, what is the appeal to in economic transactions?
Self-interest of others, not good will
According to Adam Smith, what is the key factor in maximizing production efficiency?
Division of labor
According to Adam Smith, what is the role of individual self-interest in promoting the society's interest?
Individual self-interest naturally leads to actions that benefit society
According to Adam Smith, what is the function of government in relation to public works and goods?
To create and maintain public works that cannot be achieved through voluntary cooperation
What does Adam Smith identify as the primary role of government in protecting society?
Protect against foreign invasion and internal force
According to Adam Smith, what is the significance of the 'invisible hand' in economic activities?
It leads individuals to unintentionally benefit society through their pursuit of self-interest
What is the technical meaning of 'public works/public goods' according to Adam Smith?
Products or services that cannot be achieved through voluntary cooperation or private enterprise
Study Notes
Human Nature and Self-Interest
- Humans tend to prioritize their own self-interest, according to Adam Smith's Wealth of Nations.
Laissez-Faire Economy
- A laissez-faire view of government in relation to the economy leads to economic growth and prosperity.
Economic Shame
- To be unable to support oneself and one's family is considered the worst shame in economic terms.
Economic Transactions
- In economic transactions, people appeal to the self-interest of others.
Maximizing Production Efficiency
- The key factor in maximizing production efficiency is the division of labor.
Individual Self-Interest and Society
- Individual self-interest promotes the society's interest, as individuals pursuing their own interests inadvertently benefit others.
Government Role in Public Works and Goods
- The government's role is to provide public works and goods that the private sector cannot or will not provide.
Protection of Society
- The primary role of government is to protect society from external threats, maintain law and order, and ensure national defense.
The Invisible Hand
- The 'invisible hand' is a concept that describes how individual self-interest leads to socially beneficial outcomes, as if guided by an invisible force.
Public Works and Public Goods
- Public works and public goods refer to goods and services that are non-rivalrous and non-excludable, such as roads, public parks, and national defense.
Test your knowledge of classical liberalism and early capitalism with this quiz on the influential economist Adam Smith. Explore Smith's economic orientation and his ideas on the role of government in the economy. Key texts such as "The Wealth of Nations" are covered in this quiz.
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