Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in:
A. A shift of the budget line inward to the left
B. A shift of the budget line outward to the right
C. No change in the budget line
D. An increase in the slope of the budget line
Answer: C
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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 the next question using the figure below.
In the diagram, line AB is the U.S. production possibilities curve and line AC shows the consumption possibilities for the U.S. after it has decided to engage in international trade. We can conclude that the United States
A. has decided to trade beef for cheese. B. has chosen to specialize in the production of cheese. C. is relatively more efficient than its trading partners in producing both cheese and beef. D. has chosen to specialize in the production of beef.
When we compare the records of the CPI and the PCE price index over time, the
A) two are very different in magnitude. B) PCE price index tends to exceed the CPI. C) CPI tends to exceed the PCE price index. D) two measures are identical. E) CPI tends to exceed the PCE price index when inflation is high, and the PCE price index tends to exceed the CPI when inflation is low.
If the demand for a good decreased, what would be the effect on the equilibrium price and quantity?
a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would decrease, and quantity would increase.