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:

Imitate

The action of copying or mirroring the behavior, actions, or gestures of another individual.

Reward Helpfulness

involves providing incentives or positive feedback to encourage and reinforce helpful behavior in individuals or groups.

Gender-typing

The process by which a child becomes aware of their gender and thus behaves accordingly by adopting values and attributes of members of the sex that they identify as their own.

Divorced Mother

A woman who has legally terminated her marriage and may be facing the challenges of raising children post-divorce.