Well, if you refuse the king, there are two effects:
1. The King becomes angry at you. This carries the benefit of having to deal with a larger REF later on as points start to build up for it early on.
2. The king is likely to refuse to give you discounted military units.
I believe a patch added in that the King's anger increases REF growth rate. I believe this is the case. Be careful. Be balanced in your efforts. A few hundred isn't too painful.
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