Consider the AD/AS Macro Model

question 37

Multiple Choice

Consider the AD/AS macro model.A permanent demand shock that causes equilibrium output to rise above potential output will

• A)allow a stable expansion of real income over time.
• B)always reverse itself.
• C)be negated in the long run,through the economy's adjustment process.
• D)result in a price level lower than that preceding the demand shock.
• E)set off an endless cycle of price rises and increases in unemployment.

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Definitions:

Bootstrap Confidence Interval

A method of estimating the confidence interval for a parameter by resampling with replacement from the original data and recalculating the statistic of interest multiple times.

Bias

A systematic error or deviation from the true value in data collection, analysis, interpretation, or review that can lead to incorrect conclusions.

Trimmed Mean

Trimmed Mean is a measure of central tendency calculated by removing a specified percentage of the smallest and largest values from a data set before calculating the mean of the remaining data.

Resampling Method

A statistical technique that involves taking repeated samples from observed data, used for estimation or testing hypotheses.