The shortest of the three lags for monetary policy is

People ________ their labor supply in response to a temporary decrease in government purchases because

A) increase; current or future taxes will decrease, making them financially better off. B) decrease; current or future taxes will decrease, making them financially better off. C) decrease; current or future taxes will increase, making them financially worse off. D) increase; current or future taxes will increase, making them financially worse off.

As a group, U.S. consumers have no income response for their consumption of ice cream so that the income elasticity of demand for ice cream equals zero

Does this mean that the change in ice cream consumption that results from a price increase is entirely composed of the substitution effect? A) Yes, the income effect associated with a price change is zero B) No, any price change moves the point of consumption to a new indifference curve, so there must be a non-zero income effect C) No, the income and substitution effects in this case move in opposite directions and completely offset one another, so it only appears that the income effect is zero D) We need more information about the goods to answer this question