Identify which of the following examples reflects a way Adam Smith thought the government should be involved in the economy.
A. The government decides to prohibit box companies from selling their boxes to another country overseas.
B. The government decides to limit how many flowers any individual person can buy because supply is limited.
C. The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
D. The government decides to let businesses set new policies about international trade.
C. The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
To determine which of the options reflects a way Adam Smith thought the government should be involved in the economy, we need to understand Smith's perspective on government intervention.
Adam Smith is widely known as the father of modern economics and is associated with the concept of laissez-faire, which advocates for minimal government intervention in economic affairs. Smith believed that the economy should be guided by the forces of supply and demand and that individuals acting in their self-interest would result in the most efficient outcomes.
Taking this into account, we can evaluate the given examples:
A. The government decides to prohibit box companies from selling their boxes to another country overseas.
This option represents government interference in the economy by imposing restrictions on international trade. Adam Smith would likely be against this type of governmental action since he believed in the benefits of open trade and allowing businesses to make decisions regarding international commerce. This option does not align with Smith's views.
B. The government decides to limit how many flowers any individual person can buy because supply is limited.
This option reflects government regulation of the market based on supply limitations. Adam Smith believed that the market should determine prices and quantities through the forces of supply and demand. Therefore, he would likely oppose the government setting limits on individual purchases.
C. The government builds a road from a city to a major seaport and charges a fee for cars to drive on that road.
This option involves government infrastructure development and imposing a fee for usage. From Smith's perspective, this example could be viewed as a legitimate role for the government. He recognized that certain public goods, such as transportation infrastructure, may require governmental involvement. However, it's important to note that Smith favored limited government intervention overall, so while he may find this type of activity acceptable, it does not encompass his broad view on government involvement.
D. The government decides to let businesses set new policies about international trade.
This option reflects Adam Smith's belief in limited government intervention. Smith argued that businesses should have the freedom to engage in international trade and make decisions regarding their policies. This aligns with his concept of free markets and minimal government interference, making it the most likely choice that reflects how Adam Smith thought the government should be involved in the economy.
Therefore, the correct option is D. The government decides to let businesses set new policies about international trade.
The example that reflects a way Adam Smith thought the government should be involved in the economy is:
D. The government decides to let businesses set new policies about international trade.
Adam Smith, a prominent economist and philosopher, advocated for a free-market economy with minimal government intervention. He believed in allowing businesses to operate freely and make their own decisions, including those related to international trade. This philosophy, known as laissez-faire capitalism, suggests that government should not interfere with the workings of the marketplace.