Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting upward
C. Short-run aggregate supply shifting downward
D. Aggregate demand shifting leftward
Answer: B
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Suppose you are very picky about your outdoor BBQ experiences --- and you need exactly 1 cup of lighter fluid for each bag of charcoal you use. If you have either leftover charcoal or leftover lighter fluid, you simply discard it.
a. Letting cups of lighter fluid be denoted as 
and bags of charcoal as 
, give the simplest possible utility function that captures your tastes.
b. Suppose that your favorite charcoal has just gotten better because the producer has infused the charcoal with half a cup of lighter fluid per bag. How does your answer to (a) change?
What will be an ideal response?
Taxes can yield the efficient level of pollution if the tax is set equal to the
A) marginal benefit of pollution. B) marginal external cost of the pollution. C) marginal social cost of the pollution. D) equilibrium price of the pollution.
Taylor spends all of her income on tank tops and running shoes, and the price of a pair of running shoes is four times the price of a tank top. In order to maximize total utility, Taylor should buy
a. four times as many tank tops as pairs of running shoes. b. four times as many pairs of running shoes as tank tops. c. both items until the marginal utility of a pair of running shoes is four times the marginal utility of a tank top. d. both items until the marginal utility of a tank top is four times the marginal utility of a pair of running shoes.
In which case can we be sure real GDP rises in the short run?
a. government purchases increase and taxes rise. b. government purchases increase and taxes fall. c. government purchases decrease and taxes rise. d. government purchases decrease and taxes fall.