Which of the Following Occurs When an Expansionary Gap Is

question 22

Multiple Choice

Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?

• A)Output decreases,and the price level increases.
• B)Inflation decreases,and unemployment rises.
• C)Both the equilibrium output and the price level increase.
• D)Both the equilibrium output and the price level decrease.
• E)Inflation rises,and unemployment decreases

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Definitions:

Type I Error

The error that occurs when a true null hypothesis is incorrectly rejected, falsely indicating a statistically significant effect.

Type I Error

The error of rejecting a true null hypothesis, also known as a "false positive" error.

Type II Error

Failing to detect an effect or difference that exists because the null hypothesis was incorrectly accepted.

α

Alpha (α) is a threshold value used in hypothesis testing to determine the significance level at which the null hypothesis can be rejected.