Which of the following is characteristic of aggregate demand in Canada?
A)The real exchange-rate effect is nonexistent.
B)The interest-rate effect is relatively small.
C)The wealth effect is the most important.
D)The interest-rate effect is relatively large.

Question

Quizplus · Accepted Answer

The interest-rate effect is relatively large in Canada, as changes in interest rates can have a significant impact on consumer spending and investment. The real exchange-rate effect is not negligible, but it is not as prominent as the interest-rate effect. The wealth effect, which refers to changes in consumer spending based on changes in overall wealth, is also not as important as the interest-rate effect.

Which of the Following Is Characteristic of Aggregate Demand in Canada