Identify which of the following examples reflects a way Adam Smith thought the government should be involved in the economy. (1 point)
O The government decides to let businesses set new policies about international trade.
• The government decides to limit how many flowers any individual person can buy because supply is limited.
The government decides to prohibit box companies from selling their boxes to another country overseas
The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
The example that reflects a way Adam Smith thought the government should be involved in the economy is:
• The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
To identify which of the examples reflects a way Adam Smith thought the government should be involved in the economy, we need to understand Adam Smith's views on government intervention.
Adam Smith was a proponent of laissez-faire capitalism, which suggests that the government should have minimal interference in the economy. Smith believed that the market should be allowed to operate freely, guided by the principles of supply and demand. He argued that individuals pursuing their own self-interest in an open market would lead to economic growth and prosperity.
With this in mind, let's evaluate the provided examples:
1. The government decides to let businesses set new policies about international trade.
This example aligns with Adam Smith's perspective. Smith advocated for free trade and believed that trade barriers should be removed to promote economic growth. Allowing businesses to set new policies about international trade supports the principles of a free market.
2. The government decides to limit how many flowers any individual person can buy due to limited supply.
This example does not align with Adam Smith's views. Smith believed in the free interaction of buyers and sellers without government-imposed limitations. Restricting the number of flowers an individual can purchase would be considered a form of government intervention that would interfere with the free market.
3. The government decides to prohibit box companies from selling their boxes to another country overseas.
This example does not align with Adam Smith's views either. Smith believed in unrestricted international trade. Prohibiting box companies from selling their products to another country would contradict the principles of free trade that Smith advocated for.
4. The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
This example is more nuanced. While Smith generally opposed government intervention, he recognized that there were certain areas where it may be necessary. In this case, the government building a road and charging a fee for its use could be justified on the grounds of providing infrastructure that benefits the broader economy. However, Smith would likely prefer the fees to be minimal and the road project to be funded through voluntary mechanisms rather than extensive government regulation.
Based on Adam Smith's general principles of free trade and limited government intervention, the example that reflects a way he would support the government's involvement is:
- The government decides to let businesses set new policies about international trade.