Consider the wealth effect,interest rate effect,and international trade effect.Of these,the ________ effect is the most significant and the ________ effect is the least significant.
A) wealth; international trade
B) wealth; interest rate
C) interest rate; wealth
D) interest rate; international trade
E) international trade; wealth

Question

Quizplus · Accepted Answer

The wealth effect, where an increase in wealth leads to an increase in consumption, is generally believed to have the most significant impact on the economy. The international trade effect, where changes in exchange rates affect net exports, is generally considered the least significant of the three effects. The interest rate effect, where changes in interest rates affect investment and consumption, falls in between the other two in terms of significance.

Consider the Wealth Effect,interest Rate Effect,and International Trade Effect