In the Wealth of Nations (1776), Scottish Economist Adam Smith Asserted

Reading Passage Question

In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of “truck, barter and exchange” was both the foundation of commerce and a given quality of human nature, driven by individual desire. Smith’s view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England has had tremendous effects on how such relations have been perceived. Today it is typically assumed, for instance, that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest.

However, such a view fails to account for the language that people in early modern England used to articulate their understanding of business relations, language that stressed credit, trust, obligations, and contracts, rather than self-interest. Throughout this period, most business transactions were conducted on credit—of plain dealing and of the keeping of promises —dominated the way in which business relations were conceived. Individual profit and solvency were important, but neither could be achieved without the trust and direct cooperation of one’s neighbours. As a result, buying and selling, far from breaking up communities, actually created numerous bonds that held villages together.

“In the wealth of nations (1776), Scottish economist Adam Smith asserted” - is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.
This GMAT Reading Comprehension consists of 2 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. The author of the passage refers to “truck, barter and exchange” in the highlighted text most likely in order to

(A) lend authority to the argument that commerce is characterized by self-interest
(B) identify activities that embody essential qualities of human relationships
(C) indicate the terms Adam Smith used to define business relations
(D) represent the everyday speech used in village communities in England
(E) introduces key terms used in credit transactions in early England

2. It can be inferred that the author of the passage believes that economic historians whose views have been influenced by Adam Smith have failed to examine which of the following?

(A) The power of business relations to shape moral values and beliefs
(B) The significance of human nature in shaping economic developments and social structure
(C) The importance of village communities in determining the economic well-being of larger society
(D) The consequence of individual communities of changes in a country’s economic structure
(E) The actual language used by people in village communities to refer to their business dealings

3. The passage is primarily concerned with which of the following?

(A) Criticizing a theory of human nature
(B) Evaluating the impact of a particular economist on modern theories of economic history
(C) Chronicling the early history of the use of credit in business relations
(D) Reconsidering accepted ideas about the history of business relations
(E) Explaining the decline of cooperation in village communities

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