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Recall the Application about how a simultaneous increase in the gasoline tax and decrease in the income tax affect gasoline consumption to answer the following question(s). This Application discusses a gasoline tax increase which is combined with a cut in income taxes to insure that total tax revenue does not change.


Recall the Application. If a gasoline tax increase is combined with a cut in income taxes to insure that total tax revenue does not change, the gasoline tax is:

▸ progressive.

▸ ineffective.

▸ revenue neutral.

▸ regressive.

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