- 1. The Wealth of Nations, written by Adam Smith and first published in 1776, is a seminal work in classical economics that lays the foundation for modern economic thought and analysis. In this extensive treatise, Smith explores the nature and causes of the wealth of nations, arguing that individuals pursuing their own self-interest in a competitive market can lead to economic prosperity and growth for society as a whole. He introduces the concept of the 'invisible hand,' which suggests that when individuals are free to make their own choices regarding labor and resources, they inadvertently contribute to the overall good of the community. Smith discusses various topics including division of labor, productivity, trade, and the importance of free markets, illustrating how government intervention often distorts economic outcomes. The book is structured into five main volumes, covering everything from the origins of wealth to the role of government in economic affairs. Smith's insights into the role of capital accumulation, labor, and the complexities of trade continue to influence economic theory and policy today, solidifying The Wealth of Nations as a cornerstone text in the history of economic literature.
What year was 'The Wealth of Nations' first published?
A) 1789
B) 1688
C) 1776
D) 1801
- 2. Adam Smith is often called the father of what?
A) Modern philosophy
B) Modern political science
C) Modern economics
D) Modern sociology
- 3. According to Smith, what is the primary driver of economic growth?
A) Division of labor
B) Foreign conquest
C) Mercantilist policies
D) Government taxation
- 4. Smith was a major critic of which economic system?
A) Mercantilism
B) Socialism
C) Feudalism
D) Capitalism
- 5. What is the real measure of the value of a commodity, according to Smith?
A) Its utility to the consumer
B) The price it commands in market
C) The amount of gold it can be traded for
D) The labor required to produce it
- 6. What did Smith believe was the proper role of government?
A) To redistribute wealth equally
B) To control all major industries
C) To provide defense, justice, and public works
D) To set prices and wages
- 7. Smith's concept of 'self-interest' in economic activity implies that individuals:
A) Should be forced to act for the common good
B) Seek their own gain, which benefits society
C) Have no role in a planned economy
D) Are inherently greedy and harmful to society
- 8. According to Smith, what is the main cause of the division of labor?
A) A human propensity to truck, barter, and exchange
B) The discovery of new technologies
C) Government decrees and regulations
D) Wars and conflicts between nations
- 9. Smith's theory of value is primarily a theory of what?
A) Monetary supply
B) The cost of production
C) Consumer demand
D) Market speculation
- 10. In which country did Adam Smith write 'The Wealth of Nations'?
A) United States
B) France
C) Scotland
D) England
- 11. Smith argued that labor productivity increases most through:
A) Higher wages for workers
B) The division of labor
C) Longer working hours
D) Strict management oversight
- 12. What is the 'wages fund' theory associated with?
A) A classical theory of wages that Smith contributed to
B) A socialist theory of wealth redistribution
C) A mercantilist theory of trade surpluses
D) A modern theory of unemployment benefits
- 13. Smith was a professor of which subject at the University of Glasgow?
A) Mathematics
B) Theology
C) Political Economy
D) Moral Philosophy
- 14. According to Smith, what determines the natural rate of wages?
A) The generosity of employers
B) Government minimum wage laws
C) The average wage in other countries
D) The subsistence level required for workers
- 15. Smith's ideas were a foundational argument for which type of economic policy?
A) Keynesianism
B) Laissez-faire
C) Communism
D) Protectionism
- 16. Smith's concept of 'absolute advantage' in trade refers to:
A) A company's total market share in an industry
B) A country's military power over its trading partners
C) The advantage of having a trade surplus
D) A country's ability to produce a good more efficiently
- 17. What is the full, original title of the book?
A) The Capital of Nations
B) The Principles of Economics
C) An Inquiry into the Nature and Causes of the Wealth of Nations
D) A Treatise on Political Economy
- 18. Smith argued that the value of goods for their owner lies in their:
A) Ability to be stored as wealth
B) Usefulness in production processes
C) Inherent beauty and quality
D) Power to purchase other goods
- 19. According to Smith, what is the main limit to the division of labor?
A) The intelligence of the workforce
B) The extent of the market
C) Government regulations
D) The amount of available capital
- 20. Smith's work is considered a foundational text for which ideology?
A) Classical liberalism
B) Mercantilism
C) Marxism
D) Fascism
- 21. Smith's famous example of the division of labor involved the production of what?
A) Shoes
B) Pins
C) Wheat
D) Cloth
- 22. Smith was a proponent of which concept in international trade?
A) Protectionism
B) Free trade
C) Autarky (economic self-sufficiency)
D) Managed trade
- 23. What is the term for the amount of money paid for the use of land?
A) Interest
B) Rent
C) Profit
D) Wages
- 24. What did Smith believe was the main motive for human economic activity?
A) Religious duty
B) Self-interest
C) Altruism
D) Government orders
- 25. Smith argued that competition keeps prices low and benefits whom?
A) Foreign competitors
B) Consumers
C) Only the business owners
D) Only the government
- 26. Smith was a major figure of which intellectual movement?
A) The Italian Renaissance
B) The Romantic Era
C) The French Revolution
D) The Scottish Enlightenment
- 27. What is the term for the amount paid for the use of capital (money)?
A) Profit
B) Wages
C) Interest
D) Rent
- 28. What did Smith believe was the proper source of government revenue?
A) Taxation
B) Forced loans from citizens
C) Selling public lands
D) Printing money
- 29. What concept describes how individuals pursuing their own gain unintentionally benefit society?
A) Absolute advantage
B) Labor theory of value
C) Invisible hand
D) Mercantilism
- 30. Smith argued that free markets function best with what type of government role?
A) Limited
B) None
C) Totalitarian
D) Heavy
- 31. What concept describes an individual's or country's ability to produce a good at a lower opportunity cost?
A) Monopolistic advantage
B) Mercantilism
C) Absolute advantage
D) Comparative advantage
- 32. Smith was a proponent of 'laissez-faire,' a French term meaning what?
A) Fair trade
B) Control the market
C) Tax the rich
D) Let do / leave alone
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