Question: If a community makes different spending decisions when offered a block grant or, alternatively, a categorical grant of equal size, we know that
(a) The community reaches a higher level of social welfare under the block grant.
(b) The categorical grant elicits more spending in the designated category than the block grant does.
(c) The categorical grant elicits a level of community expenditures in the designated category equal to the size of the grant.
(d) All of the above. Choose the relevant option and provide a detailed justification and a graphical illustration.