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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The price of dishwashers has remained relatively constant while the quality of dishwashers has improved. The CPI
A) is adjusted monthly to reflect the improvement in quality. B) is increased monthly to reflect the increased quality of dishwashers. C) has an upward bias if it is not adjusted to take account of the higher quality. D) has an upward bias because it does not reflect the increased production of dishwashers. E) should not take account of any quality changes because it is a price index not a quality index.
Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?
a. C+D b. A+B c. B+C d. A+B+C+D
Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:
A) an increase in price and quantity. B) a decrease in price and an increase in quantity. C) a decrease in both price and quantity. D) an increase in price and a decrease in quantity.
The multiplier is reduced by an income tax because an income tax reduces the fraction of each dollar of GDP that consumers actually receive and spend.
Answer the following statement true (T) or false (F)