If the US Were to Place a Carbon Tax on Fossil Fuels

question 125

Multiple Choice

If the U.S. were to place a carbon tax on fossil fuels, we can expect

• A) the price of fuel oil to decrease.
• B) the price of fuel oil to increase.
• C) no change in the price of fuel oil.
• D) an increase in demand for fuel oil.

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Definitions:

Tax Shifting

The process by which the economic burden of a tax is passed from one entity to another, such as from businesses to consumers.

Regressive

In economics, describes a situation or policy that disproportionately affects those with lower incomes or wealth, often referring to certain tax systems.

Progressive

Relates to a context where something increases or develops in stages incrementally.

Federal Taxes

Taxes collected by the federal government, involving income tax, payroll taxes, and various other taxes.