Recessions in the US have generally been caused by unanticipated reductions in Aggregate Demand or Unfavorable Supply Shocks. Which component of real GDP do economists believe fluctuates most over the course of the business cycle and accounts for about half of real GDP declines in recessions? a. consumption expenditures b. government expenditures C. investment expenditures d. net exports 7. The Aggregate Demand Curve is downward sloping because as the Price Level drops, people will demand more real GDP due to a. the interest rate effect b. foreign purchases effect C. real balances effect d. all of the above 8. The Short Run Aggregate Supply curve is upward sloping because as the Price Level rises, firms will increase supply and take advantage of higher pricing due to the fact that a. wages for employees are mostly fixed in the short run b. rent is mostly fixed in the short run C. material costs are mostly fixed in the short run d. all of the above 9 . Supply side economists believe that by reducing business taxes and regulations, aggregate supply will increase, resulting in increased aggregate demand and real GDP, and higher tax revenues to the government.In addition to JFK, which President below embraced this theory of economics? a. Bill Clinton b. Gerald Ford C. Jimmy Carter d. Ronald Reagan 10. The US tends to run federal annual budget deficits. Which metric do economists generally look to as an indicator of the US' ability to pay these deficts back in the future? a. federal annual budget deficit a % of US Total Public Debt b. federal annual budget deficit as a % of US Disposable Income C. federal annual budget deficit as a % of US GDP d. none of the above 1/. Which of the following has been suggested as a contributing cause of the Great Depression in the 1930s? a. a decline in the money supply . a dramatic decrease in stock prices C. the collapse of the banking system d. All of the above are correct. 12. Stagflation (like the U.S. experienced in the 1970s) exists when the price level a. and real GDP rises. b. rises and real GDP stagnates. C. falls and real GDP rises. d. and real GDP falls. 13. The US Total Public Debt is the grand total: a. of all past federal deficits and surpluses since the founding of our country . of all past federal deficits since the founding of our country C. of all consumer debt in our country d. of all consumer, business and government debt in our country