An increase in the supply of money will lead to ____ in equilibrium real GDP and ____ in equilibrium price level.

A Consumer Price Index (CPI) adjustment overcompensates for inflation because it ignores

A) the income effect when relative prices change. B) the substitution effect when relative prices change. C) that some goods are inferior. D) that the substitution effect may offset the income effect.

In the above figure, if the firm is producing Q2 units at a price P2, it should

A) increase output and decrease price. B) decrease output and increase price. C) not change output or price. D) shut down.