Answer: c. insane
The narrator of this excerpt complains that other people characterize him as insane (<em>"why will you say that I am mad?"</em>) and he wants to deny the credibility of this claim. He says that he might be nervous, but he is not mad. In fact, his senses are sharper than ever, as he can hear everything, including what goes on in Heaven and Hell. This fact, intended to convince us of his sanity, proves that he is indeed insane.
For a second, there seems to be hope when Hazel cries about her son dying. That fleeting moment disappears, and we know this because when George says "you can say that again", she repeats it, misunderstanding his statement because of her average (more like way below average) intellect.
Kurt Vonnegut's goal was not writing a story about courageous people overcoming their weaknesses and defying odds, but how society shuts down those non-conforming, defiant people.