Suppose during a year, in the country United States, Personal Consumption Expenditures was $ 15 trillion, Private investment and the corporate spending on the non-final capital goods was $4 trillion, Government Consumption Expenditure was $3 trillion, the value of exports was $ 2 trillion, and the value of imports was $1 trillion. Then calculate the aggregate demand of the U.S.

The macroeconomic goal that involves keeping the rate of unemployment and inflation at acceptable levels over the business cycle is the goal of . 2. The _________ economists believe that aggregate demand needs active guidance, whereas the ___________ economists believe that aggregate demand can take care of itself. 3. The recurrent fluctuations in the level of national production is called the . 4. When economic activity declines, usually measured by a fall of real GDP for two consecutive quarters, the economy is said to be in a . 5. The equation that expresses the inverse relationship between the unemployment rate and the rapid growth of real GDP is known as . 6. The level of output that occurs when the economy is not suffering from an unemployment problem (that is, when any unemployment that exists is just transitory), is called output.

In the traditional macro model (with no government or foreign sector), what households and firms intend to spend on consumption and investment is called ____________. 8. The equation AD = C + II is a(n) __________, because it reflects a theory about the behavior of one or more economic agents or sectors. The equation Y = C + I is a(n) ___________, because it represents the actual level of aggregate spending that in fact occurs. 9. In the Keynesian consumption function, C = C + mpc Y, C represents _______, the mpc is the __________, and Y represents __________. 10. The ________ is the portion of every dollar of aggregate income that is saved, and can be expressed as S/Y. 11. The formula 1/(1-mpc) is the formula for the "income/spending __________" in a simple closed economy with no government.

the unemployment rate is associated with an approximately 3% increase in real GDP. 14. Y = AD only when actual investment equals intended investment. 15. In a situation with insufficient aggregate demand, C + II < C + I 16. According to the classical economists, a sudden fall in investment spending would cause a fall in the interest rate, and the lower interest rate would then stimulate investment spending again and return it to its original level. In the traditional macro model (with no government or foreign sector), what households and firms intend to spend on consumption and investment is called ____________. 8. The equation AD = C + II is a(n) __________, because it reflects a theory about the behavior of one or more economic agents or sectors. The equation Y = C + I is a(n) ___________, because it represents the actual level of aggregate spending that in fact occurs. 9. In the Keynesian consumption function, C = C + mpc Y, C represents _______, the mpc is the __________, and Y represents __________. 10. The ________ is the portion of every dollar of aggregate income that is saved, and can be expressed as S/Y. 11. The formula 1/(1-mpc) is the formula for the "income/spending __________" in a simple closed economy with no government.

17. Explain the two "stylized facts" of the business cycle. 18. What was the response to the Great Depression of economists trained in the classical school? 19. Explain the difference between the behavioral equation AD = C + II , and the accounting identity Y = C + I (in a simplified economy with no government or foreign sector). What are the determinants of investment spending in the Keynesian model, and which factor is plays the most important role (especially in a recession)? 22. In the Keynesian model, what happens to investment and inventories when there is insufficient aggregate demand.