Which of the following statements is true about innovations and entrep

QUESTION

Which of the following statements is true about innovations and entrepreneurship?

A. A command economy creates greater incentives for innovation and entrepreneurship than a market economy.

B. If a country’s economy is to sustain long-run economic growth, the business environment must restrict entrepreneurial activity.

C. A high level of entrepreneurial activity leads to a low level of innovation.

D. Innovations in production and business processes lead to an increase in the productivity of labor and capital.

E. Strong legal protection of property rights creates an unfavorable environment for innovation and entrepreneurship.

ANSWER

D
Innovation and entrepreneurial activity help to increase economic activity by creating new products and markets that did not previously exist. Moreover, innovations in production and business processes lead to an increase in the productivity of labor and capital, which further boosts economic growth rates.