1.The aggregate demand curve shows

a. the quantity of goods and services that households (not firms) want to buy at each price level.

b. the quantity of goods and services that firms (not households) want to buy at each interest rate.

c. the quantity of goods and services that households, firms, and the government want to buy at each price level.

d. none of the other answers are correct.

e.the quantity of goods and services that households, firms, and the government want to buy at each interest rate.

2.Which of the following is an automatic stabilizer?

a. FDICinsurance

b. none of the other answers are correct.

c. Defense spending.

d,The income tax system.

e. An open market operation.

3.Direct foreign investment in the U.S. economy

a.offsets excess imports.

b. hurts the U.S. economy.

c.Both of these answers are correct:Offsets excess imports ANDhurts the U.S. economy.

d. offsets excess exports.

e. Both these answers are correct: Offsets excess exports AND hurts the U.S. economy.

4.Which of the following statements most accurately defines the "velocity of money"?

a.Velocity equals the price level multiplied by real GDP divided by the amount of money in the economy.

b.Velocity is the average rate at which money changes hands in the economy.

c.Velocity is the rate at which banks clear checks.

d. Both of these are correct:Velocity is the average rate at which money changes hands in the economy. AND:Velocity equals the price level multiplied by real GDP divided by the amount of money in the economy.

e. Both of these are correct:Velocity is the rate at which banks clear checks. AND:Velocity is the average rate at which money changes hands in the economy.