In the Wealth of Nations, Adam Smith Proposes That the Government

question 45

Multiple Choice

In The Wealth of Nations, Adam Smith proposes that the government should

• A) refrain from interfering in business.
• B) carefully regulate business.
• C) leave business alone, except for enacting protective tariffs.
• D) protect workers.
• E) carefully allocate resources to ensure their best possible use.

---

Definitions:

Labor-supply Curve

A graphical representation showing the relationship between the wage rate and the quantity of labor workers are willing to supply.

Elasticity Positive

Positive elasticity indicates that when the price of a good or service increases, the quantity demanded increases, or vice versa, showing a direct relationship between price and demand.

Income Elasticity

The responsiveness of the demand for a good to a change in an individual’s income.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a positive correlation between income and demand.