Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

Which of the following statements is true?

A) Optimization in levels is based on behavioral analysis. B) Optimization in differences is based on marginal analysis. C) Optimization in differences is often faster than optimization in levels, as it considers all aspects of the feasible alternatives. D) Optimization in levels is often slower to implement than optimization in differences, as it considers only the aspects in which alternatives differ.

Comparisons between industrialized nations and less-developed countries indicates that as income rises, the demand for a clean and well-preserved environment

a. increases by a proportional amount. b. decreases by a proportional amount. c. increases by a more than proportional amount. d. decreases by a less than proportional amount.