FIGURE 23-3 Refer to Figure 23-3

question 67

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.

---

Definitions:

Otto von Bismarck

A German statesman who served as Prime Minister of Prussia and was the first Chancellor of the German Empire, known for his role in the unification of Germany.

East Africa

A region of Africa that includes countries along the eastern coast and nearby islands, known for its diverse cultures, languages, and ecosystems.

Karl Peters

A German colonial ruler, associated with the establishment of German East Africa, and known for his aggressive and brutal methods of colonization.