Which of the Following Claims Concerning the Importance of Effects

question 183

Multiple Choice

Which of the following claims concerning the importance of effects that explain the slope of the U.S.aggregate-demand curve is correct?

• A)The exchange-rate effect is relatively small because exports and imports are a small part of real GDP.
• B)The interest-rate effect is relatively small because investment spending is not very responsive to interest rate changes.
• C)The wealth effect is relatively large because money holdings are a significant portion of most households' wealth.
• D)None of the above is correct.

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