Question

In a laissez-faire economy, the government plays a

Answer 1

It means governments don't interfere. Laissez-faire economy basically means some people can buy or sell stuff as they wish without regulation, especially without governmental regulation.

Answer 2

The correct answer is the government plays a limited role in the economy.

Laissez faire is a French term that roughly translates the "hands off." This idea of laissez faire economics became popular in America during the Gilded Age. The implementation of this idea was spurred by the writings of people like Adam Smith and his book On the Wealth of Nations.

The logic behind this idea is that the economy works best when the government does not get involved much. Smith, and other economists, argued that government interference isn't really necessary. This is due to the fact that businesses will compete against each other for customers. In order to do this, businesses must act in the best interest of the consumer. This competition between businesses is known as the "invisble hand" concept.