Can someone tell me how a fuel gauge works in a car?

Evan

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I have a 2000 Plymouth Neon and it seems like every time i turn the car on it has less gas. When im driving the needle jumps around a lot. It also seems like the needle moves when I go down hills or on bumpy roads. I thought I was just getting bad gas mileage but could this be a problem with the gauge?
 
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