Laissez Faire Policy Flashcards, test questions and answers
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What is Laissez Faire Policy?
Laissez-faire is an economic policy that advocates for minimal government interference in business and trade. The concept originated in eighteenth century France, where it was used to describe the absence of government control and regulation over commerce. The term Laissez-faire, which translates from French into allow to do or leave it alone, reflects this notion of minimal governmental involvement. Under a laissez-faire system, businesses are allowed to operate without restrictions from the government. This means that businesses have the freedom to make their own decisions about production and pricing without having to comply with regulations or other forms of government oversight. The primary goal of laissez-faire is to promote economic growth by allowing market forces to set prices and allocate resources more efficiently than possible under a heavily regulated economy. Proponents believe that free markets are more effective at responding quickly to changes in demand and supply than governments can be, resulting in faster economic growth as well as greater job creation and higher wages for workers. Additionally, supporters argue that free markets are better at reducing inequality because they allow individuals with different skillsets and interests to compete on an equal footing while encouraging innovation through competition among businesses. However, opponents of laissez-faire economics have argued that such policies often lead to greater inequality due to the fact that larger corporations are able take advantage of the lack of regulation in order increase their profits at the expense of consumers or smaller businesses who may not have access to similar resources or opportunities for success. Additionally, some economists believe that complete laissez faire policies can lead market failure due an inability for some goods or services provided by monopolies or oligopolies being priced too high for average consumers leading them unable access them even though they may need them badly. In conclusion, laissez faire economics has been shown both its advantages such as increased economic growth but also its disadvantages like increased inequality between different classes within society.