Scenario 21-2

Multiple Choice

Scenario 21-2. The following facts apply to a small, imaginary economy.• Consumption spending is $5,200 when income is $8,000.• Consumption spending is $5,536 when income is $8,400.
-Refer to Scenario 21-2. In response to which of the following events could aggregate demand increase by $1,500?

A) A stock-market boom stimulates consumer spending by $300, and there is an operative crowding-out effect.
B) A stock-market boom stimulates consumer spending by $225, and there is an operative crowding-out effect.
C) An economic boom overseas increases the demand for U.S. net exports by $300, and there is no crowding-out effect.
D) An economic boom overseas increases the demand for U.S. net exports by $225, and there is no crowding-out effect.