IB Business Management Higher Level (HL) Practice Test

The main idea here is the level of government involvement in business. Laissez-faire describes exactly that: letting businesses operate with as little government interference as possible, with the market handling most decisions through supply and demand. Governments would intervene only to enforce laws, property rights, and basic order.

Capitalism, while it centers on private ownership and market-driven production, doesn’t inherently specify how much the government steps in; it can include varying degrees of regulation. A market economy relies on price signals from markets to allocate resources, but many societies pair it with regulatory policies, taxes, and public goods provisions, so intervention isn’t necessarily minimal. Free enterprise focuses on the freedom of private enterprise and competition, but again doesn’t specify a minimal level of government involvement.

So the term that matches the idea of minimal government intervention in business operations is laissez-faire.