Which of the following is incorrect?
a. given aggregate demand, an increase in aggregate supply increases real output and, assuming downward-flexible prices, reduces the price level.
b. as the u. s. price level rises, u. s. goods become relatively more expensive so that u. s. exports fall and u. s. imports rise.
c. as the price level falls, the demand for money declines, the interest rate declines, and interest-rate-sensitive spending increases.
d. when the price level increases, real balances increase and businesses and households find themselves wealthier and therefore increase their spending.

David consumes two things: gasoline (g) and bread (b). david's utility function is u(g, b) = 10g^0.25 b^0.75. use the lagrange technique to solve for david's optimal choices of gasoline and bread as a function of the price of gasoline, p_g, the price of bread, p_b, and his income m. with recent decrease in the price of gasoline (maybe due to external shock such as shale gas production) does david increase his consumption of gasoline? for david, how does partial differential g/partial differential p_g depend on his income m? that is, how does david's change in gasoline consumption due to an increase in the price of gasoline depend on his income level? to answer these questions, find the cross-partial derivative, |partial differential^2 g/partial differential m partial differential p_g.