The capitalist economy comprises two forms of economic organization,the market mechanism operated by prices and the administrative mechanism of firms.
A)The market mechanism is referred to as the "visible hand" while the administrative mechanism of firms is referred to as the "invisible hand"
B)The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand"
C)The simultaneous operation of both "hands" means that the capitalist system is often referred to as an "ambidextrous organization"
D)The notion of the capitalist economy as governed by market processes is a myth.In reality the global capitalist economy is controlled by large corporations.

Question

Quizplus · Accepted Answer

The market mechanism is referred to as the "invisible hand" while the administrative mechanism of firms is referred to as the "visible hand." This terminology was popularized by economist Adam Smith in his book "The Wealth of Nations." The invisible hand refers to the self-regulating nature of the market through the actions of individual participants, while the visible hand refers to the control and management of firms through their internal administrative processes. Option A is incorrect because it incorrectly reverses the terms "visible hand" and "invisible hand." Option C is incorrect because the term "ambidextrous organization" is not commonly used to describe the capitalist system. Option D is incorrect because while large corporations do have significant power in the global economy, the market mechanism still plays a crucial role in determining prices and allocating resources.

The Capitalist Economy Comprises Two Forms of Economic Organization,the Market