Question

Concerned about the political fallout from rising gasoline​ prices, the government cuts the tax on gasoline. At the same​ time, the​ oil-producing nations increase production. The tax cut​ ______ the supply of gasoline and the increase in oil production​ ______ the supply of gasoline.

Answer 1

Answer: 1) increases and 2) increases

Explanation:

When a government cuts tax on gasoline then it will become cheaper for the consumer as well as for the suppliers of gasoline. So, they increase the supply of gasoline because of the tax cut by the government.

Also, if the oil producing companies decided to increase the production at the same time then this will also increase the supply of gasoline.

Hence, both tax cut by the government and increase in oil production results in higher supply of gasoline.