A government is laissez-faire when it does not interfere with business affairs and does not regulate its actions
Further Explanation
Laissez-faire is an economic theory that resists any form of government interference in business affairs. It uses the principle that the less involvement of the government in the economy the more successful it can become, leading to the success of society as a whole. Free market capitalism is based on this Laissez-faire philosophy.
The following are the common types of legislation Laissez-faire economists oppose:
• minimum wages
• duties
• trade restrictions
• corporate taxes
Effects of Laissez-faire in the society
While Laissez-faire was implemented in the late 18th and early 19th century it was also noticed that it resulted in large gaps between the wealthy and the poor, unsafe working conditions for the workers and starvation.
Government Intervention
In the beginning of the 20th century significant government controls and regulations were implemented with the goal of protecting workers from unsafe working conditions and to protect consumers from unfair trading practices.
Criticism of Laissez-Faire
Critics of Laissez-faire targeted the moral ambiguities that is attached to capitalism as a system, to which, it does not inherently protect the lowest in the society. As an argument, advocates believe that when individuals pursue their interest first, the benefits will follow. However, for the detractors, Laissez-fair only leads to economic imbalances and poverty.
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Keywords: laissez-faire, economics, government
The correct option is (C). A government is Laissez-faire when it does not interfere in business affairs and does not regulate its actions.
Further Explanation:
Laissez-Faire:
The theory of Laissez-faire in the 18th century. It states that the government should not intervene in the business affairs of the country. All the business activities should be carried out independently to the government restrictions and involvement. Laissez-faire is a French word which means leave alone. Therefore, this theory supports the idea of free-flow of business activities in the economy.
This theory states that the interaction of the government blocks the creativity of the business so, in Laissez-faire economy, the interference would be free to form an entity and take actions freely without the of the government.
Thus, a government is Laissez-faire when it does not interfere in business affairs and does not regulate its actions.
Justification for the correct and incorrect option:
A.
Fairly regulates workers: This is an incorrect option.
In Laissez-faire, the government does not interfere in the actions of the business. Therefore, it does not regulate the workers.
B.
Fairly regulates businesses: This is an incorrect option.
In Laissez-faire, the government does not interfere in the actions of the business.
C.
Does not interfere with business affairs and does not regulate its actions: This is the correct option. In Laissez-faire, the government does not interfere in the actions of the business. Therefore, it does not regulate the actions of the business.
D.
Leaves workers alone and doesn’t regulate unions: This is an incorrect option.
The government does not interfere in any activity of the business.
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Answer details:
Grade: Senior School
Subject: Economics
Chapter: Types of Economics
Keywords: Government, laissez-faire, fairly, regulates, workers, businesses, .does not interfere, with business affairs, regulate actions, leaves, workers, alone, doesn’t, regulate, union.