Reference no: EM131238784
During the spring and summer of 2008 when gasoline prices were rising? quickly, politicians in several countries proposed a moratorium on some or all gasoline taxes to help consumers. In the United? States, John? McCain, the Republican candidate for? President, proposed suspending the federal gasoline tax of 18.4 cents¢ for the summer when demand tends to be higher.
Hillary? Clinton, while an active candidate for the Democratic nomination for the? President, also pushed this plan. In the United? Kingdom, Prime Minister John Major proposed delaying a 2p rise in a fuel tax until the fall. How would these? short-run policies have affected the prices consumers pay in these countries if the policies had been? enacted?
Temporarily suspending or delaying fuel taxes that consumers pay would:
A. not lower fuel prices because fuel supply is horizontal in the short run.
B. shift the demand curve down by an amount equal to the size of the suspended tax.
C. not lower fuel prices because fuel supply is only horizontal in the long run.
D. shift the demand curve up by an amount equal to the size of the suspended tax.
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