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Subsidy Definition

A subsidy is a grant or monetary gift given by a private person or entity (often a government) to another private person or entity, as financial assistance or to help launch an enterprise. Critics of government interventions in free markets often use a wider definition, arguing that whole industries have come to rely on subsidies without accepting that label; these critics consider any form of production subsidized if it does not bear the full costs of its operation, be it due to acquiescence or support by the state. Supporters of subsidies often justify their use as intended for some socially beneficial purpose, although economists point out that subsidies may often have socially detrimental effects.

Additional meaning of Subsidy:

Examples of subsidies include welfare, farm subsidies, and certain aspects of student loans.

A subsidy normally exemplifies the opposite of a tax, but can also be given using a reduction of the tax burden. These kinds of subsidy are generally called tax expenditures.

Capital Reserve

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