Answer:
The statement you provided is not entirely accurate. The economic system described is not exclusively "capitalism" but is a fundamental component of capitalism. Capitalism is a broader economic and social system characterized by private ownership of the means of production, where individuals or private entities can invest capital (money) with the expectation of earning a return on their investment, which may include interest.
To clarify:
1. **Capitalism:** Capitalism is an economic system in which private individuals or businesses own and operate the means of production, such as factories, land, and resources. In capitalism, individuals or entities can invest their capital (money) in various ways, including lending it to others in exchange for interest or investing it in businesses to generate profit. The pursuit of profit is a central feature of capitalism.
2. **Lending Money with Interest:** The practice of lending money with interest is a financial activity that occurs within the framework of capitalism. It is a common way for individuals, banks, and financial institutions to deploy their capital to earn a return on investment. This practice helps provide capital for various economic activities, such as starting businesses, investing in projects, or purchasing real estate.
In essence, capitalism encompasses a wide range of economic activities, including lending money with interest, as part of its system of private ownership, competition, and the pursuit of profit. However, capitalism also involves other components, such as markets, competition, property rights, and the pricing mechanism, which collectively shape the dynamics of the economic system.
Step-by-step explanation: