FIGURE 23-3 Refer to Figure 23-3

Multiple Choice

FIGURE 23-3 Refer to Figure 23-3.Which of the two economies,A or B,will experience more volatile fluctuations in national income in response to aggregate demand shocks?

A) Economies A and B will experience similar volatility because the slopes of the AD curves are the same.
B) Economy A because the large fluctuations in the price level lead to large fluctuations in national income.
C) Economy A because the multiplier is much larger than in Economy B.
D) Economy B because the multiplier is much smaller than in Economy A.
E) Economy B because output is purely demand determined,and there is no offsetting effect from a price level increase.