Question

Consider the following statements about Adam Smith and his economic philosophy: A. Adam Smith's concept of the ``invisible hand'' implies that individuals pursuing their self-interest contribute to societal well-being.
B. Smith argued that government intervention is essential in regulating markets for economic efficiency.
C. The wealth of a nation is determined by the productivity and efficiency of its labour force.
D. Modern economists have built upon Smith's ideas but have also recognized the need for macroeconomic policies.
Choose the correct answer from the options given below:

• A. A, C, D only
• B. B, C, D only
• C. A, B, D only
• D. A, B, C, D

Hint:

Adam Smith is linked with invisible hand, self-interest, division of labour and free-market ideas, not heavy government regulation.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
Adam Smith, the author of "The Wealth of Nations" (1776), is the pioneer of classical economics and free-market ideology.
Step 2: Detailed Explanation:
- Statement A: Correct. This is the core of the "Invisible Hand" theory—unregulated competition leads to beneficial outcomes.
- Statement B: Incorrect. Smith was a proponent of "Laissez-faire" (non-intervention). He believed government should only handle defense, justice, and specific public works.
- Statement C: Correct. Smith identified the division of labor and labor productivity as the primary drivers of national wealth.
- Statement D: Correct. Modern economics uses Smith's foundations but incorporates Keynesian and other macro-interventionist policies for stability.
Step 3: Final Answer:
Statements A, C, and D are accurate descriptions of Smith's philosophy and its legacy. Statement B contradicts his free-market views.
Therefore, option (A) is correct.