Which of the Following Best Describes the Concept of Laissez-Faire

question 121

Multiple Choice

Which of the following best describes the concept of laissez-faire?  

• A) Government should NOT intervene in the economy. 
• B) Government should actively intervene in the economy whenever it judges the action to be beneficial. 
• C) Government should intervene in the economy only to promote short-term economic stability. 
• D) Government should intervene in the economy only to maximize long-term growth rates.

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Definitions:

Inflationary Premium

The component of interest rates or yields on financial instruments that compensates investors for the anticipated erosion of purchasing power due to inflation.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Loanable Funds

Financial resources available for borrowing, often within the context of a market setting interest rates.

Time Preference

The degree to which individuals prefer to receive goods, services, or returns on investments sooner rather than later.