What 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 due to its close economic ties to the United States. As the interest rates in the US change, it affects investment and consumption in Canada, which in turn affects aggregate demand.

What Is Characteristic of Aggregate Demand in Canada