The Invisible Hand Principle, as Developed by Adam Smith in the Wealth

question 582

Multiple Choice

The invisible hand principle, as developed by Adam Smith in The Wealth of Nations, states that

• A) government control over economic activity is essential for the talents of individuals to be directed toward their highest valued use.
• B) the economic wealth of a nation is determined by a nation's holdings of precious metals, such as gold and silver.
• C) public policy should prohibit domestic producers from selling their goods to foreigners.
• D) competitive markets will bring individual self-interest and the public interest into harmony.

---

Definitions:

Savings Dollars

Funds that are saved and set aside for future use instead of being spent.

Flow

In the context of finance, it often refers to the movement of funds in and out of a business, project, or investment, including cash flow.

Continual Shortage

A persistent situation wherein the demand for a product or resource outweighs its supply, often resulting in sustained higher prices or unmet demand.

Floor Brokers

Professionals who execute trades on a trading floor of a stock exchange on behalf of clients.