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Discipline: Economics

Question topic: Taxes

Source: Originais Teachy

Level of difficulty: Hard

(Originais Teachy 2023) - Question Hard of Economics

The city of Economville has a population of 100,000 residents. The local government, in an effort to raise funds for public services, is considering implementing a new tax on carbon emissions. Experts predict that this carbon tax will decrease the use of fossil fuels, leading to a reduction in carbon emissions. However, they also predict that it may negatively impact the local economy by increasing the cost of goods and services, as businesses pass on the tax to consumers. Based on your understanding of the role of taxes in the economy, what potential impacts could this new carbon tax have on the economic performance and behavior of individuals and businesses in Economville?
The implementation of a carbon tax in Economville could have both positive and negative impacts on the local economy. It could lead to a reduction in carbon emissions and stimulate growth in green industries, but it could also increase costs for businesses and consumers and potentially exacerbate income inequality.
The implementation of a carbon tax in Economville will only have positive impacts on the local economy, leading to a significant reduction in carbon emissions without any negative consequences.
The carbon tax will have no impact on the local economy of Economville, neither positive nor negative.
The carbon tax will lead to a significant increase in the cost of goods and services, but it will not affect the use of fossil fuels or carbon emissions in Economville.
The implementation of a carbon tax in Economville will only have negative impacts on the local economy, leading to an increase in costs for businesses and consumers without any reduction in carbon emissions.


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