Explain what the lock-in effect is for capital gains

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Explain carefully how the rate of inflation and the length of the holding period (how long a durable asset is owned) affect the burden of the capital gains tax for the owner of an asset.

Explain what the lock-in effect is for capital gains that are taxed on realization. Explain how this effect can lead to inefficient allocation of capital.

Reference no: EM13978303

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