Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 25 - Part IX - Production and Growth - Problems and Applications - Page 546: 8

Answer

Peace is needed for an economy to experience its greatest level of consumption. If, instead, the society was at war, then there would be increased production of war-time goods, but then there might be a decreased population in the society for consumption.

Work Step by Step

Taxes allow the government to spend, and a flat tax would be easier to enforce than a tiered tax. With justice, Adam Smith thought the government should step away from commerce and enforce the law.
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