The emergency highway energy conservation act was passed in 1974. under this act, states would only get federal highway funding if they set a speed limit of 55 mph on all four-lane highways. why would the federal government deny funding the states instead of just directly setting the speed limit? the federal government wanted to better allocate money by cutting down on highway funding. state legislatures were not likely to reduce the speed limit to 55 mph on their own. states were thought to have the right to regulate their own intrastate highways. studies by the federal government

Before the Emergency Highway Energy Conservation Act each state could set their own speed limit within the range of 40 mph and 80 mph. However, around 1974, different countries from Europe and the United States supported Israel, which the Arab petroleum exporter countries did not like.

Therefore, the Arab countries stop sending oil to the United States, and this cause a rise in gas prices, which is why the president Nixon set the speed limit of 55 mph because Studies by the federal government showed that was the most efficient speed that consumed the less gas.

answer: the risk-return relationship. generally, the higher the potential return of an investment, the higher the risk. there is no guarantee that you will actually get a higher return by accepting more risk. diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.

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