Which Policy Is Most Consistent with a Laissez-Faire Economic Philosophy

question 47

Multiple Choice

Which policy is most consistent with a laissez-faire economic philosophy?

• A) using the Federal Reserve system to expand the supply of money in order to promote commercial lending
• B) providing subsidies for people to start new small businesses
• C) requiring automobile manufactures to meet certain fuel economy standards
• D) eliminating regulations that limit the types of loans that banks may offer to consumers
• E) establishing zoning laws that limit the ways that individuals and firms use land in certain places

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Definitions:

North American Free Trade Agreement

A trade agreement among the United States, Canada, and Mexico to reduce trade barriers and promote economic exchange.

Efficient Equilibrium

A state of balance in a market where resources are allocated in the most efficient way possible, with no room for welfare improvement without making someone else worse off.

Relative Price

The price of one good or service compared to another, usually indicating how much of one can be exchanged for the other.

Economic Outcome

The result of economic activities, often measured by metrics such as GDP growth, unemployment rates, and inflation.