Adam Smith and Capitalism AP History quiz

📚 Quick Study Guide

• 👨‍🏫 Adam Smith (1723-1790): Scottish economist and philosopher, often called the "Father of Modern Economics."
• 🤝 The Wealth of Nations (1776): Smith's most famous work, advocating for free markets and capitalism.
• 💰 Capitalism: An economic system where private individuals or businesses own capital goods. Production is based on supply and demand in the general market (market economy) rather than via central economic planning (planned economy or command economy).
• 🖐️ Laissez-faire: A policy of minimal government intervention in the economy, championed by Smith.
• 🧮 Invisible Hand: Smith's concept that individual self-interest in a free market unintentionally benefits society as a whole.
• 🏭 Division of Labor: Breaking down complex tasks into smaller, specialized roles to increase efficiency.
• 🌍 Free Trade: International trade without tariffs, quotas, or other restrictions. Smith argued it promotes economic growth.

Practice Quiz

1. Which of the following is considered Adam Smith's most influential work?
   1. A. *The Communist Manifesto*
   2. B. *Das Kapital*
   3. C. *The Wealth of Nations*
   4. D. *On Liberty*
2. What economic system did Adam Smith advocate for in *The Wealth of Nations*?
   1. A. Communism
   2. B. Socialism
   3. C. Capitalism
   4. D. Mercantilism
3. What does "laissez-faire" economics generally promote?
   1. A. Increased government regulation
   2. B. Minimal government intervention
   3. C. Nationalization of industries
   4. D. Centralized economic planning
4. According to Adam Smith, what unintentionally benefits society in a free market?
   1. A. Government subsidies
   2. B. Collective bargaining
   3. C. Individual self-interest
   4. D. Charitable donations
5. What is the "division of labor," as described by Adam Smith?
   1. A. Equal distribution of wealth
   2. B. Breaking down tasks into specialized roles
   3. C. Government employment programs
   4. D. Workers' rights movements
6. What is the main characteristic of "free trade," according to Adam Smith?
   1. A. High tariffs on imported goods
   2. B. Strict import quotas
   3. C. International trade without restrictions
   4. D. Government-controlled exports
7. Which concept is most closely associated with Adam Smith's belief that competition and self-interest, guided by an "invisible hand," would lead to economic prosperity?
   1. A. Central Planning
   2. B. Command Economy
   3. C. Market Economy
   4. D. Feudalism