1.2 Aggregate demand 1. Explain why the aggregatedemand (AD) curve is downwardsloping (when the central bank uses money supply as its policy instrument). Explain also why there is no difference between aggregate demand in the long run (LRAD) and aggregate demand in the short run (SRAD) . . Explain how consumer pessimism (or loss of consumer condence) may affect AD. . Explain how consumer pessimism would affect the equilibrium value of each of the macro variables in the attached formsiin both the long and short runs. [To be handed in after the midterm.] Explain how investor pessimism (or loss of investor condence) may affect AD and the macro equilibrium. By \"investor,\" we mean those who invest in physical capital (e.g., machines and equipment) rather than in nancial securities (e.g., bonds). In other words, we are talking about \"real\" (rather than \"nancial\") investors here. [To be handed in after the midterm.]