Which of the Following Statements Is True

question 178

Multiple Choice

Which of the following statements is true?

• A) The decision maker controls the probability of making a Type I statistical error.
• B) Alpha represents the probability of making a Type II error.
• C) Alpha and beta are directly related such that when one is increased the other will increase also.
• D) The alternative hypothesis should contain the equality.

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Definitions:

Rational Expectations

An economic theory suggesting that individuals make predictions about future economic events using all available information in an unbiased and informed manner.

Discretionary Policies

Economic policies based on the judgment and decisions of policymakers, as opposed to set rules or formulas, often involving changes in government spending or taxation.

Policy Rules

Guidelines or protocols that dictate the actions of an organization or government in specific situations to achieve desired outcomes.

Laffer Curve

A theory that suggests there exists an optimal tax rate which maximizes government revenue without deterring economic growth, demonstrating the trade-off between tax rates and taxable income.