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Adam Smith’s book, Wealth of Nations he used the phrase “invisible hand”. Does the meaning still hold true 225 years later? If so, describe a fewIn modern-day examples. If not, explain why.
Yes, the meaning of “invisible hand” still holds true 225 years later. The concept refers to the idea that individuals are guided by an unseen force (the market) when making decisions about their economic activities. While Smith intended for this theory to explain why private investment leads to public good, his concept has been expanded over time to include many other economic scenarios as well.
Examples of the invisible hand in action today include:
1. Supply and Demand – Market forces encourage producers and consumers to seek equilibrium prices through natural competition.
2. Investment and Risk – Investors must carefully weigh risk against potential rewards before investing their money in a particular project or venture.
3. Labour Markets – Companies must provide competitive wages and benefits in order to attract the best employees for their roles or face losing them to competitors who offer more attractive packages.
4. International Trade – Countries must compete with each other in order to secure beneficial trade agreements that benefit both parties involved and give them access to markets they otherwise could not reach on their own due to geographical limitations or high cost of production domestically.