The Federal Gasoline Tax Is Assessed on a Per-Gallon Basis

question 41

Multiple Choice

The federal gasoline tax is assessed on a per-gallon basis, and the proceeds are used for highway maintenance and improvements. This tax is consistent with the

• A)ability-to-pay principle of taxation.
• B)benefits-received principle of taxation.
• C)single-tax theory of taxation.
• D)pay-as-you-go theory of taxation.

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Definitions:

Price Level

A uniform average of prices across the diverse range of economic goods and services.

Potential Output

The highest level of real gross domestic product (GDP) that can be sustained over the long term without increasing inflation.

Price Level

An indicator reflecting the average prices of goods and services in an economy at a given time, showcasing the cost of living and inflation.

Firms' Expectations

The outlook or anticipations of businesses regarding future economic conditions, sales, and profitability, which can influence their investment and production decisions.