Question

Respond to one of the following in a minimum of 175 words: Respond to only one of the following in a minimum of 175 word) Discuss: If the economy runs most efficiently when left on its own (Adam Smith’s invisible hand), then why do we need government involvement? Do you think government should be so heavily involved in our economy?

Answer 1

Adam Smith based his theory on invisible hand which says that economy always reach its equilibrium due to variable supply and demand in an economy. He argued that there is no need of government intervention in economy. On the other hand, modern liberal economy argues against it and says that government is needed due to:

• maintain trade and good relations with other countries
• to enhance equitable growth
• economic growth by distributing property rights
• infrastructural growth

I believe there should be interference of government along with free market to enhance efficiency.