Scenario 21-2

question 63

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. For this economy, an initial increase of $500 in government purchases translates into a

• A)$1,428.57 increase in aggregate demand in the absence of the crowding-out effect.
• B)$3,125.00 increase in aggregate demand in the absence of the crowding-out effect.
• C)$1,428.57 increase in aggregate demand when the crowding-out effect is taken into account.
• D)$3,125.00 increase in aggregate demand when the crowding-out effect is taken into account.

---

Definitions:

Holder in Due Course

A term in commercial law referring to a party who has received a negotiable instrument in a legitimate manner for value, without notice of any defects in the instrument or claims against it.

Immediate Party

A term not commonly used in a specific legal definition, but generally refers to parties directly involved in a legal transaction or matter.

Bad Faith

Deliberate deceit or a refusal to fulfill one's obligations or agreements, often implying a dishonest intent.

Sale of Goods Act

refers to a statutory framework that regulates the sale and purchase of goods, setting out the rights and duties of both buyers and sellers.