The government subsidizes driving by building roadways, but it also taxes driving through gasoline taxes. Which of the following is TRUE?
A) Road-building expenditures must be less than gasoline tax revenues.
B) Deadweight losses from road subsidies exceed deadweight losses from gasoline taxes.
C) These policies at least partially offset each other because a subsidy is a negative tax.
D) These policies compound each other because a subsidy is the same thing as a tax.
Correct Answer:
Verified
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