Scenario 24-1

question 116

Multiple Choice

Scenario 24-1.Take the following information as given for a small,imaginary economy:

-Refer to Scenario 24-1.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.