A Reduction in Government Spending Causes the Equilibrium Level of Aggregate

question 74

Multiple Choice

A reduction in government spending causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant.

• A) rise; MP; right
• B) fall; IS; left
• C) fall; MP; left
• D) rise; IS; right

---

Definitions:

Independence

A situation in statistics where two events are not influenced by each other, and the occurrence of one does not affect the probability of occurrence of the other.

Chi-Square Statistic

A statistical measure used to evaluate the differences between observed and expected frequencies in categorical variables.

Observed Frequencies

The number of times a particular value or event actually occurs in a dataset.

Expected Frequencies

In statistical analysis, these refer to the counts predicted by a probability model or theoretical distribution, used in the comparison of observed data for goodness-of-fit tests.