1. The interest rate effect is the tendency for changes in the price level to affect A. the quantity of investment demanded and thus affect interest rates. B. export demand and thus affect aggregate demand. C. interest rates and thus affect the quantity of investment and consumption demanded. D. real incomes and lead to shifts in potential output. E. interest rates and thus affect the productivity of existing capital equipment. 2. Draw a correctly labeled graph to show the impact of an increase in taxes on aggregate demand