Describe Adam Smith's laissez-faire model of economics.
What will be an ideal response?
Laissez-faire capitalism holds that private individuals and firms should be free to make their own production and distribution decisions. As argued by Adam Smith in The Wealth of Nations (1776), demand for a good or service will result in it being provided by the private sector, while a decline in demand will result in a cutback in supply. The incentive that drives this process is profit. According to Smith, the desire for profit is the invisible hand that guides the private economic system toward the greatest wealth for all. Smith did acknowledge that certain areas of the economy, such as roadways, are natural monopolies and are better handled by government than by private firms. No country today follows a purely free-market model, though the United States tends strongly toward the private side.
You might also like to view...
Judicial review gives __________
a. Congress the power to review the financial affairs of the federal courts b. the Supreme Court the power to declare an act of Congress unconstitutional c. the executive authority the power to review the judiciary for impropriety d. Congress the ability to overturn judicial rulings
Which of the following was a notable event that occurred in India in August 1947?
A. The British government helped the Indian Hindus and Muslims unite together. B. The British government granted India its independence. C. The British government succeeded in uniting Hindu-majority India and Muslim-majority Pakistan into one nation. D. India began its first rebellion against its British colonizers. E. India suffered civil war and the resulting secession of half the country as the new country of Bangladesh.