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2. Instead of the matching grant, suppose Central City received a lump sum grant of S55,000 that must be spent on public safety. If the

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2. Instead of the matching grant, suppose Central City received a lump sum grant of S55,000 that must be spent on public safety. If the total income of Central City residents is $22 million and the income elasticity of demand for public safety is 0.8, what is the expected effect of this grant on public safety spending and taxes? Why does the matching grant increase spending more than the lump sum grant

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