How did capitalism contribute to the development of modern economies?

• A. By abolishing the use of money and relying solely on barter systems.
• B. By encouraging private ownership and competition, leading to increased innovation and economic growth.
• C. By eliminating all forms of market exchange and promoting central planning.
• D. By restricting individual choice and enforcing uniform prices for all goods and services.

Answer: (B)

Verified step by step guidance

1. Understand the core principles of capitalism: private ownership of resources, free markets, and competition among businesses.
2. Recognize how private ownership incentivizes individuals and firms to invest, innovate, and efficiently allocate resources to maximize profits.
3. Analyze the role of competition in driving innovation and improving products and services, which contributes to economic growth.
4. Contrast capitalism with alternative economic systems such as barter economies or centrally planned economies, noting how capitalism encourages market exchanges using money rather than barter.
5. Summarize that capitalism's encouragement of private ownership and competition leads to increased innovation and economic growth, which are key drivers in the development of modern economies.