Which best describes the role that government and business play in investments?

Which best describes the role that government and business play in investments?

A. They both use taxes to support a country’s growth.

B. They both invest money to earn a profit.

C.They both receive capital to use for growth.

D. They both act as angel investors for start-ups.

Answer: C.They both receive capital to use for growth.

This option provides the best description of the typical involvement of government and business in investments. The two firms depend on the flow of capital as a source of finance that can enable them to increase its availability for operations as well as for various uses as mentioned below.

Companies obtain funds through various means like issuing equities (stocks), borrowing (bonds/loans), or retained profits. For instance, a technology-based firm gets equity funding to create a new product or a mature firm issues bonds to enter new regions. Companies need to use it in the funding of research and development, to bring in more facilities, to create employment opportunities for people or to buy enhanced equipment, among other processes that define growth.

Similarly, Governments’ sources of capital include taxation, and the issue of government securities for example treasury bills. It is then employed to finance operations of the government and public entities, development of facilities and other projects that can contribute to the growth of the economy and the well-being of the society. For example, a government may spend capital purchases to construct new roads, upgrade schools or fund, develop, and expand the use of clean-tech products like solar power plants and wind turbines. In some structures, the government also employs capital to extend grants or credit to the business people boosting the growth of the economy.

While the other options raise issues related to aspects of government or business activities, they do not fully depict how both participate in the process of receiving capital and using it for development. Option A is not accurate because firms do not employ taxes. Option B fails to account for among other issues, the fact that governments put their capital in to create value that can benefit the public as a whole, and not necessarily earn a return that will be high enough to warrant compensation of claims as is required for debt instruments. Option D is wrong because it simply states too much specificity regarding the governments and businesses it affects. Consequently, calling the role of government as stabilizing the investments, and the work of business stimulating economic growth, option C is the most accurate statement describing this pair of aspects.