Question

Which statement best describes how the fall of the Western Roman Empire led to the development of capitalism? (1 point)

It allowed for advances in banking that made trade much easier, increasing investment.
O It allowed for banks to decide to manage their money more wisely after witnessing the overspending of the Western Roman Empire.
O It allowed for the innovation of backing paper money with silver to ensure its value.
O It allowed for the Roman double-entry banking to be later introduced to Florence, which helped capitalism to grow in Europe.

Answer 1

The fall of the Western Roman Empire contributed to the development of capitalism by fostering advances in banking and investment. Economic fragmentation and a more localized and competitive environment in Europe, along with innovations like the commenda system, helped pave the way for a capitalist economy.

Step-by-step explanation:

The statement that best describes how the fall of the Western Roman Empire led to the development of capitalism is that it allowed for advances in banking that made trade much easier, increasing investment. This advance in banking included innovations that facilitated the emergence of credit systems and methods for financing trade and commerce, which are fundamental aspects of a capitalist economic system. The fall of Rome contributed to the political and economic fragmentation of Europe, leading to a more localized and competitive economic environment that fostered the growth of trade networks and financial institutions, such as banking.

These precursors to capitalism evolved over many centuries and were strongly influenced by economic activities and innovations that arose in the Italian city-states, such as the commenda system, where investors funded merchants' trading enterprises. These developments laid the groundwork for the rise of European mercantilism and the advent of early joint-stock companies, fostering an investment culture that is an essential element of capitalism.