The "invisible hand" of Adam Smith's theory could best guide economic activity because:
A) state-owned manufacturing signified the wealth of a nation.
B) it controlled middle-class entrepreneurs with legislative restrictions on trade.
C) it made all mercantilist interests legitimate functions of government.
D) all humans are rational and are the best judges of their own interests.
E) Smith believed that ecomomics was controlled by something beyond human understanding.

Question

Quizplus · Accepted Answer

Adam Smith believed that individuals are rational and capable of making the best decisions for themselves. The "invisible hand" refers to the idea that markets will self-regulate, with supply and demand guiding the allocation of resources in the most efficient way possible. Therefore, the best guide for economic activity would be the rational choices of individuals and the self-regulating nature of the market.

The "Invisible Hand" of Adam Smith's Theory Could Best Guide