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WAEC Economics 2008 Question 45

Question 45

Money and Inflation

Which of the following will have a more destabilizing effect on the economy?

  1. A.A tax on the prices of vehicles
  2. B.A tax on petrol
  3. C.A decrease in the supply of vehicles
  4. D.Moderate increase in wages.
Show the answer and explanation

Answer: B (A tax on petrol)

Explanation

Petrol is used in transport and production across the economy, so a tax on it raises costs and prices everywhere.