Governments offer subsidies to encourage certain economic activities, or to help achieve the larger goals of the nation. They are typically offered in the form of cash payments such as grants, tax breaks as well as low-interest guaranteed loans. Subsidies can assist a poor community access education, healthcare or housing, or provide benefits to companies like lower taxes and government purchases of their products.

Many critics of subsidy programs highlight the distorted incentives they create. They claim that subsidies encourage businesses to give money to political campaigns and insist on preferential treatment by the policymakers. They also note that subsidies often discourage innovation and inefficiency, making businesses that rely on them less likely to invest in the latest technology or modify their business model to satisfy consumer requirements.

No matter what the goal, the effect of these subsidies may be hard to calculate and contain significant costs that are not included in government projections. They may also be a source of more efficient public spending.

When governments subsidize the production of energy, they can lower the price of solar panels for homeowners and also assist companies that sell these panels, by providing tax credits or by lowering their costs. They can also encourage the purchase of goods or services for instance, by providing subsidy to families who cover the cost of insurance. A similar way, the government can encourage people to get federal student loans by guaranteeing that they myrrdin-inc.com will be able to repay them at low rates and providing perks such as deferment or flexible repayment schedules.