Georgia Assessments for the Certification of Educators GACE Practice Test

Adam Smith is best known for:

1. Arguing for free market economics

2. Arguing that the government should redistribute income

3. Founding the doctrine of mercantilism

4. Supporting the spread of communism

The correct answer is: Arguing for free market economics

Adam Smith is best known for arguing for free market economics, a concept that is foundational to modern economic theory. His seminal work, "The Wealth of Nations," published in 1776, outlines the principles of capitalism and the idea that individuals pursuing their own self-interest in a free market can lead to economic prosperity for society as a whole. Smith introduced the concept of the "invisible hand," which describes how individuals' efforts to maximize their own gains in a competitive market can benefit everyone by contributing to economic growth and efficiency. This idea supports the notion that government intervention should be minimal and that markets should operate freely to allocate resources effectively. The other options reflect concepts that are not associated with Smith's theories. For instance, the idea of government redistribution of income is contrary to Smith's views on personal wealth and free enterprise. Similarly, mercantilism, which emphasizes state control over the economy and trade, precedes Smith and is contrary to his advocacy for free market systems. Finally, the promotion of communism is entirely out of alignment with Smith's beliefs in capitalism and private property.