If the percentage change in quantity demanded of a good is smaller than the percentage change in price, consumers are very price sensitive to the price change of the good

Assume the income of consumers of good X (a normal good) increases. What occurs at the initial equilibrium price for X that signals market participants that the equilibrium price must change?

A) A surplus is created by an increase in supply. B) A surplus is created by a decrease in demand. C) A shortage is created by an increase in demand. D) A shortage is created by a decrease in supply.

Starting from a balanced budget, which of the following would NOT cause a government budget deficit?

A) A decrease in taxes B) An increase in spending of goods and services C) An increase in transfer payments D) A 50 percent increase in spending accompanied by a 50 percent increase in taxes