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:

Western Culture

A social and cultural tradition originating from Western Europe and broadly influencing the Americas, Australia, and parts of Asia, characterized by emphasis on individualism, democracy, and scientific progress.

Empirical Science

A science based on observation and experiment rather than theory alone.

Materialism

The belief or attitude that physical possessions and their acquisition are more important than spiritual or ethical values.

Analyze Dreams

The process of interpreting the symbols and themes in dreams to understand more about an individual's subconscious thoughts, emotions, and desires.