Multiple Choice Question
How do governments invest in capital goods?
A.
by providing free medical care for all of their citizens
B.
by providing housing assistance for all of their citizens
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
To answer this multiple-choice question, we need to understand what capital goods are and how governments typically invest in them.
Capital goods are long-lasting, durable goods that are used by businesses to produce other goods and services. These can include machinery, equipment, vehicles, and infrastructure. Governments invest in capital goods to stimulate economic growth, enhance productivity, and foster development in various sectors.
Looking at the options provided:
A. Providing free medical care for all citizens is a form of social welfare expenditure and does not directly contribute to investment in capital goods. This option can be eliminated.
B. Housing assistance for citizens is another form of social welfare expenditure and not directly related to investment in capital goods. This option can also be eliminated.
C. Giving tax breaks to companies that protect the environment is more focused on environmental sustainability and promoting environmentally-friendly practices. While it can indirectly support investment in capital goods, it is not a direct investment in them. This option is not the most suitable answer.
D. Giving tax breaks to manufacturers that update their machinery is a direct form of government investment in capital goods. By incentivizing companies to upgrade their machinery and equipment, the government encourages technological advancements and productivity improvements. This option aligns with the typical way governments invest in capital goods and is the most appropriate answer.
Therefore, the correct answer is D. Governments invest in capital goods by giving tax breaks to manufacturers that update their machinery.