What is the price of an additional dollar of local spending

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Reference no: EM131244255

Suppose that Colorado is considering two alternative methods of funding local road construction, matching grants and block grants. In the case of the matching grant, Colorado will spend $1 for every $1 spent by localities.

a. What is the price of an additional dollar of local spending in each case?

b. Which of the two methods do you think would lead to higher levels of local spending on roads? Explain your answer.

Reference no: EM131244255

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