The country of Epsilon has continuous strong economic growth and ...

[javeds]

The country of Epsilon has continuous strong economic growth and a steady price level. This situation is most likely the result of aggregate demand growing ________ aggregate supply.
 
  A) at the same pace as long-run
  B) slower than long-run
  C) slower than short-run
  D) faster than long-run

Question 2

If the government raises the tax on cigarettes, what is the effect on people's incentives and choices?
 
  What will be an ideal response?

[ambernicolefink]

Answer to Question 1

A

Answer to Question 2

The government raises the tax on cigarettes to discourage smoking. With a higher tax the price of cigarettes rises. The opportunity cost of smoking increases, which gives people incentive to cut their consumption of cigarettes.

[javeds]

Thanks for the timely response, appreciate it

[FergA]

Gracias!