38) Which factor will cause the aggregate demand curve to shift to the right?

increase in interest rates

reduction in personal income taxes

reduction in the aggregate price level

decrease in foreign income

39) Determinants of short-run aggregate supply include the components of GDP: consumption, investment, government spending, and net exports.

True

False

41) The long-run aggregate supply curve is vertical because of the assumption that all variables are fixed in the long run.

True

False

42) The _____ curve is positively sloped because some input costs are slow to change.

long-run aggregate demand

long-run aggregate supply

short-run aggregate supply

short-run aggregate demand

43) When the aggregate price level of an economy rises, what generally happens, according to the interest rate effect?

Interest rates rise, and investment rises.

Interest rates rise and investment falls.

Interest rates fall, and investment rises.

Interest rates fall and investment falls.

45) Suppose the economy is at full employment and a booming stock market encourages consumption spending to rise dramatically. What would be the MOST likely long-run impact?

Real GDP first rises and then falls back to long-run equilibrium.

The price level would fall, and real GDP would rise.

The price level would not change, but a recession would occur.

The price level will fall, and real GDP would fall.