Question

Adam Smith published "Wealth of Nations" in 1776. His book is regarded as the most comprehensive critique of Mercantalism in his era.

He is regarded as the most important proponent of markets -- markets as the most efficient mechanisms for creating and maximizing utility.

Smith is often brought forth today as the rationale for ending government regulation and cutting taxes.

Yet Smith was quite explicit about what he thought government -- and only government, not the private sector -- needed to do.

Which most accurately describes his ideas?

		A) National defense, currency controls, and a system of consumption-based taxes.
		B) National defense, stable currency, maintaining impartial courts, infrastructure, public education, and progressive taxation tat takes a greater share of income from the rich than from the poor.
		C) National defense, import controls, price controls for agricultural products, and economic royalism.
		D) National defense, a court system focused on upholding the property rights of landed gentry, export subsidies, and a network of private toll roads.

Answer 1

B) National defence, stable currency, maintaining impartial courts, infrastructure, public education, and progressive taxation.

When we go through Smiths functions of government he states three main functions namely

- National defence

- administration of law and order

- provision of public goods like transportation, education etc.

Smith said that citizens should taxed according tot the benefits he/ she receives from the society. He was an advocate of free trade. So that would make price controls, import controls, export subsidies, currency controls ( Smith never supported these ideas) out of the equation. Meaning options A, C, D are wrong.