In a Certain Economy, When Income Is $400, Consumer Spending

Multiple Choice

In a certain economy, when income is $400, consumer spending is $350. The value of the multiplier for this economy is 3.125. It follows that, when income is $450, consumer spending is

A) $384. For this economy, an initial impulse of $50 in consumer spending translates into a $146.67 increase in aggregate demand.
B) $384. For this economy, an initial impulse of $50 in consumer spending translates into a $156.25 increase in aggregate demand.
C) $389.38. For this economy, an initial impulse of $50 in consumer spending translates into a $146.67 increase in aggregate demand.
D) $389.38. For this economy, an initial impulse of $50 in consumer spending translates into a $156.25 increase in aggregate demand.