How do governments invest in capital goods?
A by providing free medical care
B by providing housing assistance
C by giving tax breaks to companies that protect the environment
D by giving tax breaks to manufacturers that update their machinery
D by giving tax breaks to manufacturers that update their machinery
D by giving tax breaks to manufacturers that update their machinery
The correct answer is D - by giving tax breaks to manufacturers that update their machinery.
Governments often invest in capital goods, which are long-term assets used in the production of goods or services. This is done to stimulate economic growth, increase productivity, and create jobs. One way they can encourage investment in capital goods is by providing tax breaks to manufacturers that modernize or upgrade their machinery.
By giving tax breaks, governments reduce the tax burden on manufacturers, making the investment in new machinery more attractive and affordable. This, in turn, incentivizes businesses to update their equipment, which can improve productivity, efficiency, and competitiveness.
To find the answer to this question, you need to understand the concept of capital goods and how governments support investments in them. Additionally, knowing about different policies governments implement, such as tax breaks, helps identify the correct choice.