General Education Development (GED) Practice Exam

Adam Smith is best known for his role in developing the concept of free market economics. His seminal work, "The Wealth of Nations," published in 1776, laid the foundation for classical economics and introduced the idea that individuals pursuing their self-interests could lead to positive economic outcomes for society as a whole. This concept, often referred to as the "invisible hand," suggests that when individuals engage in trade freely and willingly, resources are allocated efficiently, and societal wealth is maximized.

Smith's arguments emphasize minimal government intervention in economic matters, advocating that markets operate most effectively when individuals have the freedom to make their own choices regarding production and consumption. This idea fundamentally opposes systems that rely heavily on government control or regulation of the economy, which is why the other options do not align with his contributions. For example, mercantilism is centered on state control and regulation of the economy, while communism and government income redistribution advocate for more state intervention and control over resource distribution, which contradicts Smith's principles of a free market.