Topic: Government Fiscal Incentives
Understanding the Question:
How are tax exemptions and direct payments categorized in economic terminology?
Key Formulas and Approach:
A Subsidy is any government assistance (direct or indirect) that lowers the cost of production or increases the income of a business.
Detailed Solution:
Step 1: Analyze Tax Holidays. This is an "indirect" subsidy. By not collecting tax, the government is effectively giving the company more post-tax income to encourage investment.
Step 2: Analyze Cash Grants. This is a "direct" subsidy. The government gives money to a firm to support its operations or research.
Step 3: Eliminate other options. Tariffs and Quotas are trade barriers (restrictions). Discounts are private commercial price cuts.
Conclusion: These are both forms of Subsidies (B).