Why Is the Image of the "Invisible Hand" in Adam

question 12

Multiple Choice

Why is the image of the "invisible hand" in Adam Smith's analysis of capitalism said to be misleading?

• A) For markets to function properly, rules must be enforced by the state when violated.
• B) For markets to function properly, entrepreneurs must be admitted by lottery drawing.
• C) For markets to function properly, competition must be enforced by contractual exchanges.
• D) For markets to function properly, contractual exchanges must be enforced by historical precedents.

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Definitions:

Chart of Accounts

A systematic listing of all accounts used by an organization, categorized to facilitate financial reporting and bookkeeping.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting in the U.S.

Income Statement Accounts

The accounts that report the revenues, expenses, gains, and losses of a company, which are used to calculate the net income on the income statement.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to check for accuracy.