The Wealth Effect, Interest Rate Effect, and Foreign Trade Effect

question 12

Multiple Choice

The wealth effect, interest rate effect, and foreign trade effect all explain why the

• A) aggregate supply curve is horizontal.
• B) aggregate supply curve is vertical.
• C) aggregate supply curve is upward sloping.
• D) aggregate demand curve is downward sloping.

---

Definitions:

Regulations

Rules or directives made and maintained by an authority, designed to control or govern conduct within specific areas of activity.

Mandates

Instructions or directives given by the electorate to elected officials, or the authority granted to a government or its representatives to govern after an electoral victory.

Federal Agency

Units of the government responsible for the oversight and administration of specific functions, such as the Environmental Protection Agency or the Federal Bureau of Investigation.

Budget

A financial plan outlining expected revenues and expenditures for a specific period, used by individuals, businesses, and governments.