he state of Georgia is considering the construction of a high-speed rail system

Question

he state of Georgia is considering the construction of a high-speed rail system to alleviate traffic congestion, especially across the Atlanta Metropolis at a cost of $45 billion. Some of the funding will come from financial institutions such as Deutsche Bank, while most of it will be through the issuance of state bonds, with the rest financed by private investors who will own shares in the rail system. Explain how financial intermediation is necessary in order to make this project a reality. Why couldn’t the state use the tax revenues it collects during 2014 to pay for it?

Explanation / Answer

Ans; Financial intermediation is necessary because this will lower down the financial burden on state if it is financed by these different sources. May be this much investment is not possible for the state to do by itself only. If it is financed by tax revenues ,it would be difficult for state to bear the other expenses of the state.

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