Future Business Leaders of America (FBLA) Agribusiness Practice Test

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What is the meaning of Laissez-Faire in economic terms?

Government intervention in markets
Freedom from government interference
A focus on the production of goods
A type of economic assistance

The correct answer is: Freedom from government interference

Laissez-faire is a French term that translates to "let do" or "let go," and in economic context, it refers to a system where economic transactions and the operations of markets occur without government intervention. This principle emphasizes that the economy functions best when individuals and businesses are free to pursue their own interests and make their own decisions without outside interference. In a laissez-faire economy, prices, production, and distribution of goods are determined by supply and demand forces rather than regulatory measures or government policies. The idea is predicated on the belief that allowing individuals to operate freely can lead to more efficient and innovative outcomes. In this context, the focus is on individual freedom to engage in economic activities, reflecting a foundational belief in free-market capitalism. The concept contrasts sharply with economic systems that involve a significant level of government regulation or control over the market.