1)How is 'aggregate demand' different from 'real aggregate demand (real AD)?

real AD = aggregate demand / (price index/100)

Unlike real AD, aggregate demand includes the effect of price changes.

If the price index = 100, they would be equal.

All of the above are true.

None of the above are true.

2)The three 'Accounts' stocks on the Demand Side include all financial assets held by households, firms, and government, but exclude real assets such as cars, homes, and land.

True

False

3)The Government's bank accounts are located at various Wall Street commercial banks.

True

False

4)Wages & dividends

is an outflow from households' accounts.

is an inflow to business firms' accounts.

both (a) and (b) are correct.

neither (a) nor (b) are correct.

5)Consumption

is an outflow from households' accounts.

is an inflow to business firms' accounts

both (a) and (b) are correct.

neither (a) nor (b) are correct.

6)Both households and business firms pay taxes to the government in our model economy.

True

False

7)Government purchases of goods & services from business firms is equal to the taxes that business firms pay to government.

True

False

8)The 'U-turn' shape of the investment flow reflects an assumption in the model that

firms that manufacture capital goods sell them to households and governments.

some capital goods are manufactured by government.

defective capital goods are returned for a refund.

all of the above are true

none of the above are true

9)AD = C+I+G+NX is the correct _______ equation when the model economy engages in foreign trade.

identity

behavioral

both of the above

neither of the above

10)It is possible for net exports in the model to be

zero

negative

positive

all of the above

none of the above

Give explanation also