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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Definitions:

Epinephrine

A hormone also known as adrenaline, secreted by the adrenal glands, increasing heart rate and blood pressure during stress.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, often involving heightened physical activity and alertness.

Leptin

A hormone produced by adipose cells that helps to regulate energy balance by inhibiting hunger, thereby helping to regulate body weight.

Two-Factor Theory

A theory that asserts emotion arises from physiological arousal followed by a cognitive label of that arousal, proposed by Stanley Schachter and Jerome E. Singer.