Without Government Intervention, the Interaction Between the Multiplier and Accelerator

Multiple Choice

Without government intervention, the interaction between the multiplier and accelerator could cause

A) an ever more rapid contraction of the economy.
B) cyclical fluctuations in the economy.
C) an ever more rapid expansion of aggregate demand until a ceiling to real output is reached.
D) any of the above, depending on the size of the MPW and the accelerator coefficient.