Economists normally assume that the goal of a firm is to (i) earn profits as large as possible, even if it means reducing output. (ii) earn revenues as large as possible, even if it means reducing profits. (iii) minimize costs, regardless of profits

If the government reduces expenditure on goods and services by $30 billion, then aggregate demand

A) increases by $30 billion and real GDP increases. B) decreases by more than $30 billion and real GDP decreases. C) increases by more than $30 billion and real GDP increases. D) decreases by $30 billion and real GDP decreases. E) increases and potential GDP increases.

For a given positively sloped supply curve, the price increase to consumers resulting from a specific tax imposed on sellers will be

A) greater the more price elastic demand is. B) greater the less price elastic demand is. C) equal to the entire tax when demand is perfectly elastic. D) equal to half of the tax whenever demand is unit elastic.