The supply-side effects show that a tax cut on labor income ________ employment and ________ potential GDP

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

A) the employer benefits because wages will rise less than the change in actual prices. B) workers exactly keep pace with changes in the cost of living. C) workers benefit because the CPI increases more rapidly than does the cost of living. D) the CPI bias means that workers benefit if the price level rises and the employer benefits if the price level falls. E) the CPI bias means that workers benefit if the price level falls and the employer benefits if the price level rises.

Refer to the scenario above. In equilibrium, Neil will give ________ to Claire if no other factors such as fairness are at work

A) 5 cookies B) 1 cookie C) 4 cookies D) 2 cookies