The Wealth Effect Helps Explain the Downward Slope of the Aggregate-Demand

question 89

Multiple Choice

The wealth effect helps explain the downward slope of the aggregate-demand curve. How important is this effect and why?

• A) It is relatively important in Canada because expenditures on consumer durables is very responsive to changes in wealth.
• B) It is relatively important in Canada because consumption spending is a large part of GDP.
• C) It is relatively unimportant in Canada because money holdings are a small part of consumer wealth.
• D) It is relatively unimportant in Canada because it takes a large change in wealth to make a significant change in interest rates.

---

Definitions:

Place for Delivery

The specified location where goods or services are to be delivered, as agreed upon in a contract or agreement between parties.

UCC

Commercial transactions in every form are governed by the United States' Uniform Commercial Code, a thorough set of legal norms.

Modification

The process of making changes or alterations to something, such as a contract or agreement, often requiring consent from all parties involved.

Oral Agreement

An oral agreement is a contract whose terms have been agreed upon by speaking rather than in writing, which can be legally binding, depending on the context and jurisdiction.