Scenario 34-1

question 119

Multiple Choice

Scenario 34-1. Take the following information as given for a small economy:
• When income is $10,000, consumption spending is $6,500.
• When income is $11,000, consumption spending is $7,250.
-Refer to Scenario 34-1. For this economy, an initial increase of $200 in net exports translates into a(n)

• A)$570 increase in aggregate demand when the crowding-out effect is taken into account.
• B)$800 increase in aggregate demand when the crowding-out effect is taken into account.
• C)$1,400 increase in aggregate demand in the absence of the crowding-out effect.
• D)$800 increase in aggregate demand in the absence of the crowding-out effect.

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Definitions:

Total Assets

The sum of all current and non-current assets owned by a company, indicating the total resources available for use in operations.

Market To Book Ratio

A ratio used to compare a company's market value (market capitalization) to its book value, providing insight into how the market values the company's equity.

Book Value Per Share

The financial measure that indicates the per-share value of a company's equity available to shareholders, calculated by dividing net assets by the total number of outstanding shares.

Total Market Value

The aggregate valuation of a company, measured by multiplying its current share price by its total outstanding shares.