U.S. History STAAR ( State of Texas Assessments of Academic Readiness) Practice Test

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Which of the following best describes the economic principle of Laissez Faire?

Heavy government regulation of business
Minimal government involvement in economic affairs
Government control of all market activities
A focus on equitable distribution of wealth

The correct answer is: Minimal government involvement in economic affairs

The economic principle of Laissez Faire is best described as minimal government involvement in economic affairs. This concept, which originated in the 18th century, advocates for an economic environment where businesses operate with little to no interference from the government. Supporters of Laissez Faire believe that the economy functions most efficiently when market forces, such as supply and demand, drive business activities without regulatory constraints. This approach assumes that individuals and businesses, motivated by self-interest, will collectively make decisions that lead to optimal economic outcomes. In a Laissez Faire system, the role of the government is limited to maintaining order and protecting property rights, rather than intervening in market transactions or dictating prices. The other descriptions do not align with Laissez Faire principles: heavy government regulation represents significant involvement, government control of all market activities suggests a centralized economy rather than a free-market one, and a focus on equitable distribution of wealth typically involves government action to redistribute resources, which contrasts sharply with Laissez Faire's minimal intervention philosophy.