USA HISTORY

Detailed explanation-1: -What is Invisible Hand. Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand. Description: The phrase invisible hand was introduced by Adam Smith in his book ‘The Wealth of Nations’.

Detailed explanation-2: -The invisible hand is a metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence. This interdependence incentivizes producers to make what is socially necessary, even though they may care only about their own well-being.

Detailed explanation-3: -Often referred to as the Father of Economics, Smith explained the concept of supply and demand as an “invisible hand” that naturally guides the economy. According to Smith, the invisible hand is the automatic pricing and distribution mechanisms in the economy.

Detailed explanation-4: -The invisible hand is a concept that – even without any observable intervention – free markets will determine an equilibrium in the supply and demand for goods. The invisible hand means that by following their self-interest – consumers and firms can create an efficient allocation of resources for the whole of society.