What is meant by "limited government" in the free enterprise system?

• A. Extensive government involvement in markets
• B. Minimal government intervention in the economy
• C. Government control over all economic sectors
• D. Government ownership of businesses

Answer: (B)

In the context of the free enterprise system, "limited government" refers to the principle of minimal government intervention in the economy. This concept emphasizes that the government's role should primarily focus on creating a regulatory environment that encourages competition and protects property rights, rather than controlling or directing economic activities.

The underlying belief is that free markets are most effective when they operate with minimal interference from the government, allowing individuals and businesses to pursue their economic interests freely. This approach fosters innovation, efficiency, and consumer choice, as businesses respond to market demands without excessive regulation or government oversight.

In contrast, other choices suggest various forms of government control and intervention in the economy. Extensive involvement or control over all economic sectors would contradict the idea of free enterprise, which thrives on individual initiative and market dynamics. Additionally, government ownership of businesses inherently removes the competitive framework that the free enterprise system relies on. Therefore, the correct understanding of "limited government" aligns perfectly with the concept of minimal intervention in the economy.