INDUSTRIAL REVOLUTION
INDUSTRIAL REVOLUTION AND ITS IMPACT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The government should regulate businesses to make sure they use safe practices.
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The government should restrict which businesses are allowed to open.
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The government should make very few laws that affect businesses.
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The government should play a role in helping businesses make as much money as possible.
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Detailed explanation-1: -For example, Adam Smith, an 18th-century economist, suggested the role of government should be very hands-off. Smith introduced the concept of the “invisible hand” view of the economy, in which the phrase “invisible hand” refers to the free market itself determining prices and other aspects of the economy.
Detailed explanation-2: -Smith believed that government’s proper roles in society should be limited, but well defined: government should provide national defense, the administration of justice, and public goods.
Detailed explanation-3: -We know Adam Smith today as the father of laissez faire ("to leave alone") economics. This is the idea that government should leave the economy alone and not interfere with the “natural course” of free markets and free trade.
Detailed explanation-4: -Smith’s 3 natural laws of economics: Law of self-interest – people work for their own good. Law of competition – competition forces people to make a better product for lower price. Law of supply and demand – enough goods would be produced at the lowest price to meet the demand in a market economy.
Detailed explanation-5: -Smith believed that businesses should not be able to operate with little or no government interference but the government had a duty to protect society, administer justice, and provide public works.