21.   With the downward-sloping supply curve, higher interest rates lead to lower demand and lower supply.

22.   The change in aggregate demand will have a bigger effect on output and employment, the more elastic is the aggregate supply curve.

23.   In the extreme case where the aggregate supply curve is vertical, the increased money supply will simply lead to higher prices.

24.   What is the shape of the aggregate supply curve?

25.   Essentially, rising marginal costs determine the supply curve.

26.   Positive economic incentive effects from reduced marginal tax rates will push out the aggregate supply curve to more than absorb demand increases without raising prices.