Scenario 16-2

question 177

Multiple Choice

Scenario 16-2. 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 16-2. In response to which of the following events could aggregate demand increase by $1,500?

• A) A stock-market boom stimulates consumer spending by $300, and there is an operative crowding-out effect.
• B) A stock-market boom stimulates consumer spending by $225, and there is an operative crowding-out effect.
• C) An economic boom overseas increases the demand for U.S. net exports by $300, and there is no crowding-out effect.
• D) An economic boom overseas increases the demand for U.S. net exports by $225, and there is no crowding-out effect.

---

Definitions:

Environment

The natural world or ecosystem in which living organisms interact and depend upon for survival, including elements like air, water, soil, and climate.

Motivational Conflict

A situation where an individual faces competing desires or goals, making it challenging to decide on a course of action.

Renovate

The process of renewing or restoring something, especially a building, to a good state of repair or to a new and improved condition.

Lifestyle

The way in which a person or group lives, including patterns of social relations, consumption, entertainment, and dress.