Economic Systems Quiz

What book, written by Smith, is considered by many to be the cornerstone of capitalism and was Smith's most famous work?

• The Wealth of Nations

• Capitalism and its Implications

• Economics and Political Systems

What type of economic system did Adam Smith support?

• a free market system

• mixed economic system

• planned economic system

Adam Smith believed in free markets and free trade where the government stayed out of the economy as much as possible.

• True

• False

Who is the "Father of Economics and Modern Capitalism"?

• Adam Smith

• Karl Marx

• John Keynes

• Alfred Marshall

The policy/philosophy supporting capitalism is?

• Classic Communism

• Laissez-faire

• Idealistic Socialism

• None of the above

Smith believed that the economy operated according to three natural laws involving this concept...

• self-interest
• compassion
• citizenship
• trustworthiness 

According to Smith countries that engage in trade:

• never go to war

• have higher standards of living

• have fewer poor people

• will never fail

All of the following are negative effects of laissez-faire economics EXCEPT...

• wealthy nation
• child labor
• city slums
• neglected education 

What is the regulator in a free market economy?

• competition

• self interest

• hatred

• government

Adam Smith describes the benefits to all through our selfish or self-interested actions. He calls it

• Laissez Faire

• the invisible hand

• market efficiency

• self-determination