Recall the application about a revenue-neutral gasoline tax,how would a simultaneous increase in the gasoline tax a decrease in the income tax effect gasoline consumption?
A)Consumption will decrease.
B)Consumption will stay the same.
C)Consumption will increase.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

Simultaneously increasing gasoline taxes and decreasing income taxes will likely lead to a decrease in gasoline consumption. This is because the increase in gasoline taxes will make it more expensive for consumers to purchase gasoline, which may encourage them to use public transportation or purchase more fuel-efficient vehicles. Additionally, the decrease in income taxes will provide consumers with more disposable income, which may offset some of the cost of the gasoline tax increase, but may not be enough to incentivize increased gasoline consumption. Therefore, overall consumption is likely to decrease.

Recall the Application About a Revenue-Neutral Gasoline Tax,how Would a Simultaneous