Question

Up until the 1930s, the government took a "laissez-faire" approach to the economy. What changed and who was the main influence for this change? In what situations would government intervention into the market place warrant price controls? Please provide a couple of examples in your response.

As an additional item who has encountered the price increase due to the minimum wage increase here in Michigan? How many were surprised at the increase in price on regular items that you purchase (i.e. the dollar menu or lack thereof)?

Answer 1

Classical Economists propounded laissez-faire doctrine because they believed in invisible hand and they thought supply creates it's own demand. According to then general overproduction and glut in market was not possible. But when depression striker during 1930s it became clear that invisible hand was not functioning efficiently and that general glut was possible. Keynes explained this phenomenon by lack of aggregate demand. But classicals had no remedy for economic problems of 1930s.keynes argued that govt should step in to raise aggregate demand. Thus laissez-faire policy was laid to rest

When there is hyperinflation and when there is war.

Rents have increased. Many were surprised because they have money illusion. Your question here is not specific since numbers can't be given as there has been no good survey on it