The impact of financial markets on the economy comes partly through

Question

Quizplus · Accepted Answer

The wealth effect refers to the impact that changes in financial markets have on the overall wealth of individuals and households. As financial markets increase in value, this can lead to an increase in the wealth of individuals, which in turn can lead to increased consumer spending and economic growth. Therefore, the impact of financial markets on the economy comes partly through the wealth effect. The other choices (substitution effect, international trade effect, and travel effect) are not directly related to the impact of financial markets on the economy.

The Impact of Financial Markets on the Economy Comes Partly