Final answer:
Adam Smith posited that specialization and trade in a free market would likely result in a more equal distribution of income and an increased standard of living, as individuals acting in their self-interest would collectively and unintentionally benefit society.
Step-by-step explanation:
Adam Smith suggested that people specializing and trading in an economy would likely lead to an outcome where income will be more equally distributed and the standard of living will tend to grow. Smith's assertion is based on the premise that a free market, composed of unregulated exchanges of goods and services, will benefit everyone, not just the wealthy. This is due to the market producing more goods at lower prices, thus making them affordable for a wider range of people, and as the economy grows, capitalists reinvest profits into new ventures, leading to continuous economic growth without government interference.
Furthermore, on the individual level, Smith pointed out that self-interested actions of individuals in a free market can cumulatively benefit the society. While some degree of income inequality might be expected in a market economy due to factors like different skill levels, individual choices, and education, the general trend resulting from specialization and free trade is expected to be a rising standard of living across the board, fulfilling the proposition stated in option D of your question.