10. Gross Domestic Product
24. The "invisiblehand" is the effect of market forces (demand and supply) that control both the quantity produced and the price of goods and services. Higher price = reduced demand for a good or service, and the lower demand eventually leads to prices dropping until quantity and price are in equilibrium.
References :

11. What is a business cycle?

12. Compare and contrast a recession and a depression; describe some of the key characteristics of each of these two economic phases.

Now, go to Encarta Online Concise Encyclopedia and find the article entitled Economics.

NOTE: It would be very wise to add the Encarta Online Concise Encyclopedia URL to your bookmarks or favorites. We use this site quite often in this course, and it is only given in this lesson!

13. Write AT LEAST one-paragraph summarizing the influence of Adam Smith on modern economic thought. (Note: You can also see the Encarta Online Concise Encyclopedia article specifically about him, or get some information on the Internet, if you prefer.)

14. What is mercantilism?

15. What was the goal of this philosophy?

16. What was the main idea of physiocracy?

Now, read Encarta Online Concise Encyclopedia’s article about Karl Marx.

17. Write AT LEAST one paragraph summarizing Karl Marx’s influence on modern economic thought. (Note: As with Adam Smith, you can also see the Encarta Online Concise Encyclopedia article specifically about Marx, or get some information on the Internet, if you prefer.)

Now, go down to the section entitled Economic Systems (In the article entitled Economics).

18. Give an example of what the US government has done in the past to intervene in an otherwise relatively free market economy.

19. Why do you think the government intervenes in such instances?

20. What are some of the disadvantages of a capitalist economy?

21. Briefly compare and contrast the economic systems used in Sweden and in the former Yugoslavia.

22. What was Adam Smith’s most famous and important work?

23. Some schools of thought believed that bullion was crucial to a country’s economic sustinence; others believed that land was the most important commodity. What did Smith believe was the most important element to an economy?

24. What is the "invisible hand"?

25. Adam Smith wrote, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."
Do you agree? Why or why not?

In many ways, Adam Smith’s economic ideas underpin Western ideas of enterpreneurialism. Being an entrepreneur means organizing a business or series of business ventures that are undertaken with considerable possibility for profit and with considerable risk for loss. The risk factor, balanced with the possibility for significant profit-taking, makes entrepreneurial business ventures attractive to some, while frightening to others. Excessive government regulation regarding employee benefits or environmental restraints and responsibilities, no matter how beneficial to society as a whole, can "kill" some ventures before they get off the ground. Benevolent governmental tax policies regarding small businesses, as well as incentive programs to help businesses get established, are key factors in the numbers of successful entrepreneurial ventures. The key to success when starting a business is knowledge. Know your business from all angles, including expenses, record keeping, advertising, and risk.

26.
NEW QUESTION AS OF 11-17-08: How did Adam Smith feel about government intervention in capitalism?

27.
NEW QUESTION AS OF 11-17-08: Under what circumstances did Adam Smith feel government intervention was warranted?

28. What are two advantages of improving the "dexterity" (ease of movement) of workers?

29. What are the advantages of moving the tasks between workers rather than the workers from task to task — that is, creating an assembly line?

30. What are the advantages of the invention and use of machines?

31. Name four ways Henry Ford produced cars more efficiently by using an assembly line.

32. List three reasons why Ford raised his worker’s wages to $5.00 a day.