Consider the wealth effect, interest rate effect, and international trade effect. Of these, the wealth effect is the most significant and the international effect is the least significant.
What is the wealth effect?
This is the theory that states that people spend more money on commodities as they experience an increase in their wages.
What is the international effect?
This is the theory that the given differences that exist in nominal interest rate of countries is useful for prediction of changes in interest rate.
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