6. Which one of the following statements explains competitive market systems?

A. A competitive market system encourages growth by allowing producers to make profitable investment decisions based on market signals.
B. A competitive market system discourages growth unless government protects domestic firms from foreign competition.
C. A competitive market system discourages growth because firms that are busy competing have no time to innovate or invest.
D. A competitive market system encourages growth by ensuring that everyone in society will receive a decent standard of living.

Competitive market systems encourage growth by promoting investment decisions based on market signals and fostering innovation to meet consumer needs.

Explanation:

A competitive market system encourages growth by allowing producers to make profitable investment decisions based on market signals. When there is competition among producers to serve consumers, it ensures the greatest amount of production at the lowest possible prices.

In a competitive market system, individuals and firms have incentives to invest in physical and human capital, seek new technologies, and engage in innovative practices to stay competitive and meet consumer demands.

Overall, the power of competitive markets to allocate resources efficiently leads to macroeconomic growth and prosperity, both domestically and globally.

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