1.

If an adverse shock reduces the level of aggregate demand, it is likely to lead to higher Real GDP ("RGDP") and a higher price level ("PI"). lower Real GDP ("RGDP") and a higher price level ("PI"). higher Real GDP ("RGDP") and a lower price level ("PI"). lower Real GDP ("RGDP") and a lower price level ("PI")."Exotic" mortgages became popular in part because home prices were expected to 0 rise quickly. 0 remain Virtually constant. 0 fall precipitously. 0 become increasingly unpredictable. The projections by the Congressional Budget Office and the Office of Management and Budget for deficits are 0 typically off target, even though most of what affects the deficit is easily forecasted. O typically off target, because most of what affects the deficit is not easily forecasted. 0 always too low, suggesting that both are using wishful thinking rather than analysis. 0 usually right on target, even ten years out into the future. As the federal budget deficit increases, 0 federal borrowing is likely to decrease. O increased interest obligations become more likely. O tax cuts become more likely. 0 all of the options are correct. In 2014, national defense spending as a proportion of GDP was highest in O the United States. 0 the United Kingdom