Which approach will yield a more efficient outcome

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The city of Johnstown decides to build a new stadium to attract a basketball team from the city of Rosendale.

One economic advisor suggests that the stadium should be financed by a 2-year sales tax of 10%, while another advisor suggests that the stadium should be financed with a 20-year sales tax of 1%.

Assume that the interest rate is zero. Which approach will yield a more efficient outcome? Why?

Reference no: EM131200097

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