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The federal government follows the economic principle of laissez faire when it

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Final answer:

The federal government adheres to laissez-faire economics by avoiding direct intervention in the marketplace, allowing the private sector to operate freely based on supply and demand. Historically, this approach was more pure, but over time it has evolved into a mixed economy with government playing a variety of roles to ensure market efficiency and address societal needs.

Step-by-step explanation:

The federal government follows the economic principle of laissez faire when it refrains from direct intervention in the business sector to allow market forces to operate freely. This hands-off approach was prominent in U.S history, especially during the industrialization in the late 1800s. Proponents of laissez-faire argued that the economy would go through natural cycles of growth and recession with minimal government interference promoting an automatic cycle of economic growth and contraction.

Despite the initial reliance on laissez-faire policies, these began to change with the advent of policies from people like President Theodore Roosevelt, who introduced regulation to combat issues such as monopolies and unsafe working conditions. Ultimately, the United States moved towards a mixed economy, one that combines free-market principles with some level of government intervention, particularly during periods of economic struggle such as the Great Depression.

In today's American economy, the government plays various roles such as regulator, protector, provider, consumer, and promoter of national goals, which all reflect a departure from strict laissez-faire economics to a more moderated economic policy that adapts to the changing needs of society.

User Jeremy Hodge
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The economic principle of laissez-faire means the government has little to no interference in the economy. At its peak, the Gilded Age demonstrated the most pure of laissez-faire economics in the US. The government had no regulations for monopolies, trusts, the stock market, wages, or prices. Essentially the government is to help businesses by allowing businesses to thrive under a competitive, unregulated environment.
User Vidhya
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