37. When interest rates rise
A. Investment and consumption increase, increasing AD
B. Investment increases and consumption decreases, resulting in no
change to AD
C. Investment and consumption decrease, decreasing AD
D. The costs of production fall, increasing AS
38. If the main goal of an economy was a larger increase in the economy's
PPC, it should choose to produce:
A. More consumer goods and fewer capital goods
B. More capital goods and fewer consumer goods
C. An equal number of capital and consumer goods
D. Only consumer goods; no capital goods
39. A drought or other major natural disaster could cause which of the
following?
A. A decrease in aggregate demand and a lower price level.
B. A decrease in aggregate supply and a higher price level.
C. An increase in aggregate demand and a higher price level.
D. An increase in aggregate supply and a lower price level.
40. Investment will increase if
A. There is an increase in the real interest rate.
B. Wealth increases in the U.S.
C. There is an increase in business taxes.
D. Businesses are more optimistic about future business conditions.
41. A simultaneous and equally sized tax increase and spending increase
by the federal government will
A. Have no effect on price level or real GDP
B. Decrease price level and real GDP
C. Increase price level and real GDP
D. Increase price level and decrease real GDP
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