Which of the following government policies discourages technological innovation?
A) research and development tax credits
B) expansion of relevant work in government laboratories
C) grants and contracts from government agencies to support civilian technology
D) measures to reduce after-tax costs of plant and equipment
E) encouragement of higher rates of inflation to promote rising profits

Question

Quizplus · Accepted Answer

Encouragement of higher rates of inflation to promote rising profits can discourage technological innovation as it reduces the real return on investment in research and development. With higher inflation, the cost of inputs (e.g. labor, materials) increases, making it harder for firms to obtain resources for R&D initiatives that could lead to increased productivity and competitiveness.

Which of the Following Government Policies Discourages Technological Innovation