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:

Argument By Analogy

A form of reasoning that compares two different things because of their similarities in some respects.

Alike

Similar in nature, appearance, or characteristics; having resemblance or correspondence.

Inductive Generalization

A reasoning process that involves drawing broad conclusions from specific instances.

Light

Electromagnetic radiation that is visible to the human eye and is responsible for the sense of sight.