2 10.3.3 Test (CST): Government, Law, and Ethics in Business Wrap-Up Question 2 of 20
What is an incentive?
O A. It ensures corporations have the same rights as individ
B. It slows down business entry into certain markets.
C. It gives a person exclusive rights to make, use, or sell an invention
D. It acts as a stimulus to a market

D. It acts as a stimulus to a market

Explanation:

Incentive may be an action, an item, or a situation that encourages someone to work harder, increase production, or do more. An incentive is, therefore, encouragement or motivation to get involved more.

In business, government incentives refer to actions that encourage businesses to increase production. Incentives encourage consumers to spend more money, thereby increasing the total demand for goods and services. Tax reduction is an example of government incentives. Reduced taxes increase people's disposable income, thereby encouraging them to spend more. Taxes are expenses to business; when they are reduced, business costs are reduced, which increases profits.  

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