lesson 27 reading and writing classwork
TRANSCRIPT
7/27/2019 Lesson 27 Reading and Writing Classwork
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New Economic Ways of Thinking
As businesses grew and as new social classes emerged, new ways of thinking about how businesses should be conducted (ran) arose. One such man was Adam Smith.
Adam Smith created a policy called LaissezFaire. Laissez faire was the theory in which
businesses should be allowed to operate with little
or no government interference. Adam Smith
believed governments did not have the right to tell
business owners how to run their businesses.
Government should not be allowed to set prices on
goods, tell businesses what hours they can be openor close, or tell businesses what products to sell.
According to Smith, people were free to choose
any business they wished for work, and employers
could hire any employee they desire. Businessowners should have the right to determine pay for
their employees, and how many hours they should be allowed to work a week. Additionally, employers (business owners) should have the
choice in whether to provide their workers with benefits, such as overtime pay, health
insurance, vacation time, or sick days.
Adam Smith was against governments from becoming to strong and thus too much in
control of peoples’ lives. He was a strong supporter of Enlightenment ideas, which were
established two hundred years before his time. Without government interference, peoplehad the chance to become successful or to fail completely
on their own. People were also given the opportunity tocreate a business in their own image, thus living the “freeman’s dream.” Adam Smith predicted that his theory on
business would lead to more people opening up
businesses, and thus, more jobs for people. This was veryimportant in Smith’s opinion, because of the recent
Agriculture Revolution that just took place. With
families becoming larger and larger, more people would be
in need of work. More businesses being created wouldmean less people living in poverty (being poor).
Additionally, Smith hoped more businesses would open
up which would lead to competition between businesses.Competition between businesses would lead to businesses
trying to sell their items at a very reasonable, affordable
price, thus allowing people to purchase items without going broke. More goods that aremade, cheaper the price will be on those goods. In a competitive business market,
businesses are always competing to make the most money. To make money, goods have
to be priced reasonably.
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Adam Smith was not a supporter of monopolies. Monopolies are when one business
takes over smaller businesses. For example, if Adam Smith
were an oil company who bought out all the other smaller oilcompanies, Smith would have a monopoly on oil. A monopoly
means you could charge whatever price you would like on an
item, and people would most likely be forced to buy that item,since they could no longer get the item elsewhere. However,
Smith’s theory on no governmental interference on businesses
did have some drawbacks. Monopolies could still form, sincethe government couldn’t interfere in their business affairs.
Additionally, employers were allowed to provide long hours,
little pay, little benefits, and hardly any pay increases.
Employers could fire people at any given time. In a no government interference society,the employers became wealthier, while the poor worked relentlessly for very little.
Part 1 – Answer the following multiple-choice questions
1) The economic theory of laissez-faire capitalism proposes that
A) command economies should provide the greatest opportunity for national growth
B) the practices of mercantilism should be expanded
C) the nobility should have strict control over business and industryD) government should have minimal interference in businesses
2) Which event had the greatest impact on the development of laissez-faire capitalism?
A) Green Revolution
B) Industrial Revolution
C) Invention of the printing pressD) Fall of the Roman Empire
3) Laissez-faire economists of the 19th century argued that
A) governments should develop a state-run banking system to prevent instability
B) anarchy would result if universal male suffrage was granted
C) individuals should be allowed to pursue their self-interest in a free marketD) the government should regulate the economy and foreign trade
Turn the page >>>>>>>>>>>
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Part 2 – Complete the following question in a response of at least TEN SENTENCES.
Who is Adam Smith and what does he believe in? Do you agree with Adam Smith’s beliefs? Why or why not? What do you agree with and what do you disagree with? Be
sure to discuss WHY you agree or disagree.
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