What role does investment play in economic growth under free enterprise?

• A. It decreases productivity
• B. It provides capital for expansion and innovation
• C. It reduces job opportunities
• D. It leads to more government regulations

Answer: (B)

Investment plays a crucial role in fostering economic growth within a free enterprise system by providing the necessary capital for businesses to expand and innovate. When businesses invest in new technologies, equipment, or facilities, they can increase their production capacity, improve efficiency, and enhance the quality of their products and services. This, in turn, drives economic activity as companies can meet growing consumer demand and compete more effectively in the marketplace.

Additionally, investments in research and development can lead to innovative products and services that create new markets and opportunities, contributing to overall economic vitality. When businesses grow and thrive due to investments, they are more likely to create new job opportunities, further supporting economic growth and stability.

In summary, investment is foundational in propelling businesses forward, driving productivity, and fostering an environment where innovation can flourish, making it essential to the overall growth of the economy in a free enterprise system.