Beginning from a position of long-run equilibrium at the full-employment level of real GDP, the economy's short-run response to an increase in the aggregate demand curve would be:

A. a movement upward along the short-run aggregate supply curve.
B. a movement upward along the long-run aggregate supply curve.
C. a downward shift in the short-run aggregate supply curve.
D. a shift in both the aggregate demand curve and the short-run aggregate supply curve with a movement along the long-run aggregate supply curve.  

Answer: A

Economics

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If the price of corn chips increases from $2.00 per bag to $3.00 per bag and the quantity demanded goes down from 100 million bags per week to 50 million bags per week, the absolute value of price elasticity of demand in that price range is

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