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What were Adam Smith's basic ideas?

a) Centralized planning of the economy and government control
b) Free market capitalism, the invisible hand, and self-interest
c) Feudalism and strict government regulation of trade
d) Socialist principles and wealth redistribution

1 Answer

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Final answer:

Adam Smith's basic ideas included free market capitalism, the invisible hand, and self-interest. He believed in the invisible hand guiding the economy and advocated for laissez-faire policies with minimal government intervention. These principles are at the core of his seminal work, The Wealth of Nations.

Step-by-step explanation:

Adam Smith, a seminal figure in economic thought, is known for his endorsement of free-market capitalism, a concept characterized by minimal government interference in the market.

Smith postulated that the invisible hand, an emergent property of individuals following their self-interest, would inadvertently lead to a balance of supply and demand, thus efficiently allocating resources in society. The correct answer to the student's question is: b) Free market capitalism, the invisible hand, and self-interest.

Smith's classic work The Wealth of Nations laid the groundwork for modern economic liberalism, rejecting mercantilism and advocating for trade liberalization.

He was a proponent of laissez-faire economics, the idea that the government's role in the economy should be limited to enable markets to self-regulate. Smith also argued that such an economic system not only serves the producers but also consumers, benefiting society at large through more efficient and diverse choices.

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