Scenario 34-2

Multiple Choice

Scenario 34-2.The following facts apply to a small,imaginary economy.
• Consumption spending is $6,720 when income is $8,000.
• Consumption spending is $7,040 when income is $8,500.
-Refer to Scenario 34-2.In response to which of the following events could aggregate demand increase by $1,500?

A) A stock-market boom increases households' wealth by $500,and there is an operative crowding-out effect.
B) A stock-market boom increases households' wealth by $575,and there is an operative crowding-out effect.
C) An economic boom overseas increases the demand for U.S.net exports by $600,and there is no crowding-out effect.
D) Aggregate demand could increase by $1,500 in response to any of these events.