Question

Trusts and Big Business

Instruction Active
Laissez-Faire Government
Which of the following is an example of a government's laissez-faire approach to business and the
economy?
During a strike the government sends negotiators to work out a deal between the company and its
workers
The government brings a court case against a telecommunications company that has a monopoly in
the state of Colorado
Congress votes down a law providing a loan to a failing car manufacturer
DONE

Answer 1

The correct answer is: During a strike the government sends negotiators to work out a deal between the company and its workers.

Step-by-step explanation:

"Laissez-Faire", literally translated from French as "let do" is an economic argument against government intervention on private economic transactions, suggesting that the economic system - through the market mechanism itself - is capable of efficiently distributing resources among individuals.

In this example, both, putting a limit on monopoly power and providing a loan to an inefficient company, distort the information that the market should be sending to the decision-makers. In contrast, to serve as negotiator between workers and company's interests, does not distort the price system nor the market equilibrium.