When greg's autonomic nervous system was aroused, he misinterpreted from his past experience the harmless symptoms as indicators of an impending heart attack. this misinterpretation caused him an unusually intense level of fear. his emotional response is best understood in terms of the theory of emotion, also called the two-factor theory?

The correct answer is the Schacter-Singer's theory of emotion. 

Schacter-Singer's theory of emotion states that the process of emotional responses involves two key components: a) physical arousal and b) a cognitive label. In Greg's instance, his emotional response of fear was due to the activation of his fight or flight response or autonomic nervous system arousal (physical arousal) and the cognitive label he put on it ("heart attack"). 

It's considered to be association or connection