Scenario 21-1 $\$ 10,000$ , Consingtion Spending Is $\$ 6,500$ - Whan Income Is

question 174

Multiple Choice

Scenario 21-1. Take the following information as given for a small, imaginary economy:
- When income is $\$ 10,000$ , consingtion spending is $\$ 6,500$
- Whan income is $\$ 11,000$ , cansumption spending is $\$ 7,300$
-Refer to Scenario 21-1. For this economy, an initial increase of $500 in net exports translates into a

• A)$2,000 increase in aggregate demand when the crowding-out effect is taken into account.
• B)$2,500 increase in aggregate demand when the crowding-out effect is taken into account.
• C)$2,000 increase in aggregate demand in the absence of the crowding-out effect.
• D)$2,500 increase in aggregate demand in the absence of the crowding-out effect.

---

Definitions:

Material

Physical substances or components used in the production of goods or in the construction of projects.

Informative

Characterized by providing useful or interesting information.

Sole Proprietorship

A business structure in which one individual owns and operates the business, responsible for all its debts and liabilities.

State Tax Registration

The process by which a business or individual registers with a state authority to collect, report, and remit taxes as required by law.