My two definitely have selective hearing and I have just tested it while I am was typing... They are both asleep on a fur rug in front of the fire .
I called out one of the regular commands " it's pee pee potty time, " I got no response, not a flicker (it is by the way raining very heavy outside)
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I called out the next one which I do every night "Oh it is 9 o 'clock, it's treat time " With that my two Chihuahuas which previously looked unconscious flew across the room.
Yep they know and they react .
They even have the looks that go with the reactions, eg. none, as in example one, they don't even change their breathing. Then there is the ..you are kidding look when I insist they go out in the rain. The ..I didn't do it look when they are caught in the act. The I didn't mean to do it when one of mine hides till I find her. Oh and she uses the smug one then too. The ..you can't make me look... The please don't beat me look when I insist on something, I should add they have never ever been even threatened with a tap let alone a beating!! I could go one but I am sure many of you know what I mean.
Yep they know.