Heavily taxed items with inelastic short-run demand curves place most of the tax burden on ______.

Refer to the above figure. An increase in aggregate demand between real Gross Domestic Product (GDP) levels Y0 and Y1

A) would not increase output since the economy is already working at full capacity. B) would have no effect on the price level. C) would cause price levels to fall. D) would most likely result in some inflation.

Consider the market for peanut butter. If there is a decrease in the price of deli turkey slices (a substitute in consumption for peanut butter) along with a decrease in the price of peanut brittle (a substitute in production for peanut butter), the

A) equilibrium price of peanut butter definitely rises. B) equilibrium quantity of peanut butter definitely increases. C) equilibrium price of peanut butter might rise or fall. D) equilibrium price of peanut butter definitely falls. E) equilibrium quantity of peanut definitely decreases.