Which of the following government actions would represent the largest increase in physical capital? Tax credits to offset college tuition.

Taxes on corporate earnings.

Expansion of research and development in biotechnology.

Investment in hospitals and other health care facilities to modernize their operations.

Tax credits to offset college tuition do not add physical capital. An increase in physical capital may occur when a new physical infrastructure is built.

Raising taxes on corporate earnings discourages firms from investing in infrastructure and equipment, that is, and physical capital.

Therefore, the answer with the largest increase in physical capital would be investment in hospitals and other healthcare facilities to modernize their operations.

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