Click on the Tools menu, choose Options at the bottom of the dropdown list. Click on the Display tab when the Options window opens and change the setting for Arc and circle smoothness to 2000 (max is 20000).
Alternatively type in VIEWRES at the command line and change the setting there.
Also ensure SHADEMODE is set to 2D as circles don't always appear smooth when SHADEMODE is set to 3D.
The reason Acad defaults to a low viewres setting is to allow faster regen of the screen. A circle is still a circle even though it is seen as a series of small lines. However I haven't noticed any deterioration in screen regen when I use a setting of 2000 but then I'm not working with massive files where this may be a problem.