Compared to the long run, consumers typically ____ to price changes in the short run

Which of the following statement or statements are correct about potential GDP?

i. Actual real GDP equals potential GDP when the economy is at full employment. ii. Real GDP can be less than potential GDP. iii. When real GDP equals potential GDP, it also equals nominal GDP. A) i only B) ii only C) ii and iii D) i and ii E) i, ii, and iii

What is the error in the following argument? "An increased sales tax on gasoline won't reduce consumption, because while the higher price will at first reduce demand, the reduced demand will eventually bring the price back down again, and consumption

will return to its former level." A) A higher price doesn't reduce demand. B) A reduced demand does not cause lower prices. C) The tax-induced price increase may be greater than the price reduction due to the lower demand. D) the tax-induced price increase will necessarily be greater than the price reduction due to the lower demand, because demand is never perfectly inelastic. E) The ultimate effect on consumption may be to increase it beyond its original level.