Answer to Question #339193 in Macroeconomics for Lolo

Question

Briefly discuss the relationship between increase on fuel taxes and public social welfare as well as economic growth in South Africa

Answer 1

When gasoline prices increase, a larger share of households' budgets is likely to be spent on it, which leaves less to spend on other goods and services. The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input (such as the airline industry).