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A policymaker is deciding how to finance the construction of a new airport. He can

Chapter 1, Problem Problems and Applications 1.16

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A policymaker is deciding how to finance the construction of a new airport. He can either pay for it by increasing citizens taxes or by printing more money. What are some of the short-run and long-run consequences of each option?

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QUESTION:

A policymaker is deciding how to finance the construction of a new airport. He can either pay for it by increasing citizens taxes or by printing more money. What are some of the short-run and long-run consequences of each option?

ANSWER:

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Construction of new infrastructure in an economy is one of the government's expenditures and is financed by collecting revenue from the individuals in the economy.

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