What defines a capitalist economy?

A capitalist economy is characterized by the means of production and distribution being privately owned and operated for profit. In this system, individuals or companies own businesses and are free to make decisions about how to produce goods and services, set prices, and engage in trade. The fundamental principle is that market forces—supply and demand—drive the economy, rather than government controls or regulations.

In a capitalist system, the motive for trade is profit, and consumers have the freedom to choose goods and services, encouraging competition among businesses. This environment fosters innovation and efficiency as companies strive to meet consumer needs and outdo their rivals.

The other options describe different economic systems that do not align with the principles of capitalism. For instance, an economy controlled by the government aligns more closely with socialism or communism, where the state plays a significant role in managing economic activity. An economy based on barter focuses on the direct exchange of goods and services without the use of money, which is not characteristic of capitalism. Finally, an economy with no currency could reflect a non-monetary system, which is also not a feature of capitalist economies where currency facilitates trade.