Chapter 6: Problem 1

In the United States, investment is done ( \(\mathrm{LO} 2)\) a) entirely by the government b) mostly by the government c) about half by the government and half by private enterprise d) mainly by private enterprise

Short Answer

Expert verified

In the United States, investment is mainly done by private enterprise due to the capitalist market economy. The government does make direct investments, but they are focused on public interests and have a smaller share compared to private investments. Therefore, the correct answer is d) mainly by private enterprise.

Step by step solution

Read and understand the question

Read the question and understand that we are looking for the correct statement regarding investment in the United States. There are four options to choose from.

Understand the economy

To answer this question correctly, it is important to understand the economy of the United States. The American economy is based on capitalism, which means that individual businesses and people are responsible for making their own decisions about investments and expenditures. In a market economy, investors, entrepreneurs, and business owners are the driving forces behind economic growth by seeking profitable opportunities and making investments in new ventures and projects.

Understand the role of the government in investment

In the United States, the government does have a role in investment but mainly through indirect methods like providing a stable environment for business, enforcing laws and regulations, investing in infrastructure projects, etc. The government also provides some direct investment, but it is often focused on areas like defense, healthcare, and education, rather than on the majority of business ventures. Their direct investments are primarily meant to support public interests and long-term goals.

Compare government and private enterprise investments

Now that we understand the role of both private enterprises and the government in investment, we can compare them to determine the correct statement. Private enterprises are responsible for a majority of investments in the United States due to the nature of the capitalist market economy. The government does make direct investments, but they are focused on public interests and a smaller share compared to private investments.

Choose the correct statement

Based on our understanding of the United States' economy, the role of private enterprises, and the role of the government in investment, the correct statement is: d) mainly by private enterprise