How can changes in federal intergovernmental aid have more than a proportionate impact on state and...

How can changes in federal intergovernmental aid have more than a proportionate impact on state and local spending?

Expert Solution

Federal intergovernmental aid is financial help that the federal government provides the states to work for the national goals.

With change in the federal intergovernmental aids, the level of local and state government spending also changes. If the aid increases, the spending by state and local government also increases and vice versa.

These federal intergovernmental aids are used to finance various developmental activities combined with spending by state and local governments.

With these federal intergovernmental aids increasing, the state and local governments' combined budget will also increase to finance developmental projects. Thus it leads to more than proportionate impact on state and local spending.

Rahul Sunny answered 2 years ago

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