Take the following information as given for a small, imaginary economy: • When income is $10,000, consumption spending is $6,500. • When income is $11,000, consumption spending is $7,250. Refer to the Scenario. For this economy, an initial increase of $200 in net exports translates into a(n): _______________ $570 increase in aggregate demand when the crowding-out effect is taken into account. $800 increase in aggregate demand when the crowding-out effect is taken into account. $1,400 increase in aggregate demand in the absence of the crowding-out effect. $800 increase in aggregate demand in the absence of the crowding-out effect.

Q&A Education