Question

Read the summary. In the United States, building and maintaining the interstate highway system is supported by the federal gasoline tax. The gasoline tax was set at 18.4 cents per gallon in 1993, and it has remained at that level ever since. What is the result of the gasoline tax remaining at the same rate since 1993, despite inflation? The demand for gasoline is lower than in 1993. Highway users pay less in tolls and more in taxes than in 1993. Gasoline producers have chosen to offer lower prices than in 1993. The gasoline tax cannot pay for as many highway repairs as it did in 1993.

Answer 1

The correct answer is D) The gasoline tax cannot pay for as many highway repairs as it did in 1993.

The result of the gasoline tax remaining at the same rate since 1993, despite inflation, is that the gasoline tax cannot pay for as many highway repairs as it did in 1993.

Although this has some advantages to the final consumer because there is not a significant increase in the gasoline price due to taxation, the consequence is that inflation has indeed increased and the price of highway reparations has also increased too. The result of this is that the highway system has been affected because the maintenance works and reparations of the roads had been suffering for this lack of money.