1. Which of the following is not a component of aggregate demand? a. Consumption b. Investment c. Government expenditures d. The supply of money e. Net exports 2. When we draw the aggregate demand...

1. Which of the following is not a component of aggregate demand?

a. Consumption

b. Investment

c. Government expenditures

d. The supply of money e. Net exports

2. When we draw the aggregate demand curve, __________ should be on the x-axis and __________ should be on the y-axis.

3. The aggregate demand curve slopes downward because, at a higher price level, the purchasing power of consumers’ wealth __________ (increases/decreases) and consumption __________ (increases/decreases).

4. If the MPC is 0.2, the value of the multiplier will be __________.

5. Based on our understanding of the aggregate demand curve, we know that a(n) __________ (increase/ decrease) in the price level causes the quantity of real GDP demanded to __________ (increase/decrease).