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.

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Definitions:

P-Toluic Acid

A type of benzoic acid derivative where the methyl group is positioned para to the carboxylic acid group.

Toluene

An aromatic hydrocarbon used as an industrial solvent, known for its benzene ring attached to a methyl group.

Alkenes

Unsaturated hydrocarbons containing at least one carbon-carbon double bond, characterized by the general formula CnH2n.

Propanoic Acid

An organic compound, also known as propionic acid, characterized by a three-carbon straight-chain structure with a carboxylic acid functional group.