Why was Adam Smith opposed to mercantilism? What was the premise of Smith's theory?
What will be an ideal response?
According to Adam Smith, the Scottish economist who is viewed as the father of free-market economics, mercantilism's basic problem is that it confuses the acquisition of treasure with the acquisition of wealth. Smith attacked the intellectual basis of mercantilism and demonstrated that it actually weakens a country, because it robs individuals of the ability to trade freely and to benefit from voluntary exchanges. Moreover, in the process of avoiding imports at all costs, a country must squander its resources producing goods it is not suited to produce. The inefficiencies caused by mercantilism reduce the wealth of the country as a whole, even though certain special interest groups may benefit. Absolute advantage suggests that a country should export those goods and services for which it is more productive than other countries and import those goods and services for which other countries are more productive.
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Indicate whether the statement is true or false
Amy makes use of the Galatea effect when she says to herself
A) "Whatever results I achieve will be good enough." B) "I intend to be one of the best performers in the company this year." C) "Life is beautiful if you stop to smell the roses." D) "If I set my goals low enough, I know I will succeed."