Consider the Basic AD/AS Macro Model in Long-Run Equilibrium

question 44

Multiple Choice

Consider the basic AD/AS macro model in long-run equilibrium.An expansionary AD shock will ________ the price level and ________ output in the short run.In the long run,the price level will ________ and output will ________.

• A)decrease; decrease; decrease further; decrease further
• B)decrease; decrease; decrease further; be restored to potential output
• C)increase; increase; increase further; increase further
• D)increase; decrease; increase further; be restored to potential output
• E)increase; increase; increase further; be restored to potential output

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Definitions:

F-Statistic

A ratio of two variances used in the analysis of variance to assess whether the means of different groups are equal.

Multicollinearity

Multicollinearity refers to the occurrence in statistical models where two or more predictor variables are highly correlated, making it difficult to distinguish their individual effects.

Parameter Estimates

Parameter estimates are values derived from statistical analysis that approximate the actual parameters of a population based on sample data.

Biased

A condition where a measure or estimate systematically deviates from the true value due to a flaw in the measurement or sampling process.