Question 1(1 point)

Which of the following statements is true?

a

The most importantdeterminantsof aggregate demand are consumption, investment, government spending, and net exports.

b

Changes ininvestmentcan be caused by changes in factors such as consumers' wealth, expectations, debt, and taxes.

c

Changes ingovernment spendingcan be caused by changes in factors such as interest rates andexpected returns.

d

All of the above.

e

Only a) and b)

Question 2(1 point)

Which of the following statements is true?

a

Expected returnsdepend on expected future business conditions, technology, degree of excess capacity, and business taxes.

b

Changesinnet exportsunrelated to the price level can be caused by changes in factors such as national incomes abroad and exchange rates.

c

The largerthe multiplier effect, the smaller the impact of changes in the determinants of the aggregate demand (AD) on it.

d

All of the above.

e

Only a) and b)

Question 3(1 point)

Which of the following statements is true?

a

Consumerwealthis the difference between household assets (such as homes and stocks and bonds) and liabilities (such as loans and credit card balances).

b

The consumer will spend more if his asset values decrease, and spend less is his asset values increase.

c

Households canborrowin order to spend more, which increases AD; and if households reduce their spending in order to pay off their debt, AD decreases.

d

All of the above.

e

Only a) and c)