1. Which of the following statements about the short-run aggregate supply curve is most accurate?

A. It shifts only when the LRAS shifts in the same direction

B. It is not as steeply sloped as the LRAS.

C. It normally has a slope of zero, meaning the curve is horizontal.

D. It normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run

2. What effect would a cut in taxes combined with an increase in transfer payments have on AD?

A. It would decrease AD

B. It would increase AD

C. It would have an indeterminate effect on AD

D. It would leave AD unchanged