From the ETS Practice Test 1 fuel-tax passage: 'Economics is precise about the tax that should, in principle, be levied to deal with negative externalities: the tax on a liter of fuel should be equal to the harm caused by using a liter of fuel.' The boldfaced sentence most directly functions to

Earlier in the passage the author concedes that fuel use creates negative externalities. The boldfaced sentence then takes the general economic principle (tax should equal harm caused) and applies it specifically to fuel. ETS's stated answer for this Practice Test 1 question is 'a specific application of a general principle'.