1. When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate?

2. Give an example of a price that is sticky in the short run but flexible in the long run.

3. Why does the aggregate demand curve slope downward?

4. Explain the impact of an increase in the money supply in the short run and in the long run.

5. Why is it easier for the Fed to deal with demand shocks than with supply shocks?