A problem with laissez-faire economic policy is that there is___________________?
Correct answer: B. no provision for public goods
- A. no flexibility
- B. no provision for public goods
- C. no profit motives
- D. responsiveness to demand
Explanation
Laissez-faire relies on private markets and therefore does not adequately provide public goods, whose benefits are difficult to restrict to paying users and whose use may not reduce others’ use. Profit motives and demand responsiveness are features of markets, not omissions of laissez-faire.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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