Adam Smith Believed That Incentives to Seek Personal Gain Would

question 299

True/False

Adam Smith believed that incentives to seek personal gain would create wealth, but that the government must then step in to make sure that this wealth is equitably distributed.

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Definitions:

Disposable Income

The available cash reserves for households to spend and save once taxes on income have been settled.

Consumption

The use of goods and services by households; an economic activity that represents spending by consumers.

Average Propensity

The ratio of total consumption to total income, indicating the average tendency of consumers to spend their income.

Disposable Income

Net pay after taxes and other deductions, available for spending, saving, or investment.