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Laissez-faire economists believe/Extrapolative expectations are expectations basedon ?...

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soman2006 | Student, Undergraduate | (Level 2) Salutatorian

Posted June 21, 2010 at 6:34 AM via web

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Laissez-faire economists believe/Extrapolative expectations are expectations basedon ?

 

On Laissez -faire economis belive  1- government policies do not affect economic activity 2- government can implement policy proposals that can positively impact the economy 3- most government policies would probably make things worse 4- government intervention in the market is necessary for a smoothly operating economy

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted June 21, 2010 at 11:32 AM (Answer #1)

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The answer here is most definitely 3.  Laissez faire economists believe that the government should stay out of just about all economic affairs.  In fact the term laissez faire means something like "let them do what they want."

This type of economist believes that market forces are the best way to get all sorts of good outcomes.  They believe that government actions just distort economic incentives and encourage people to do things that they would not otherwise have done.  For example, they say that government programs encouraged US banks to give mortgages to people who should not have had them.  If left on their own, the banks would not have done this and the crash of 2008 would not have happened.

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