Question #20
Reading: Reading 7 Economics of Regulation
PDF File: Reading 7 Economics of Regulation.pdf
Page: 9
Status: Unattempted
Correct Answer: B
Question
Maldovia is a rapidly growing emerging market economy. To boost the level of capital per worker, the government allows for higher-than-previously allowed levels of depreciation expense for tax purposes on new equipment lowering the effective cost for the business. This is an example of:
Answer Choices:
A. a provision of public good/financing private project regulatory tool
B. a price mechanism regulatory tool
Explanation
Tax breaks on new equipment purchases are effectively government subsidies. Taxes and
subsidies are examples of price mechanism regulatory tool.