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.

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Definitions:

Homogeneous Products

Goods that are considered identical by consumers, and can be substituted for one another, such as commodities.

Perpetual Methods

Inventory accounting systems where updates are made continuously to reflect the buying, selling, and production of goods.

Periodic

Occurring or repeating at regular intervals of time, often used to describe recurring financial or reporting events.

FIFO

First In, First Out, an inventory valuation method where the cost of the earliest items purchased are the first to be recognized in determining the cost of goods sold.