If the Economy Is in an Inflationary Gap and the Government

question 203

Multiple Choice

If the economy is in an inflationary gap and the government attempts to balance the budget, the effect will be to

• A)counteract inflation.
• B)reduce the trade deficit.
• C)continue inflationary pressures.
• D)increase unemployment.

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Definitions:

Hypothesized Reason

An assumed explanation or cause developed for the purpose of testing through research or experimentation.

Statistical Significance

Indicates that the observed results are unlikely to have occurred by chance, according to a predefined level of significance.

Type I Error

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

Type II Error

The error that occurs when one fails to reject a false null hypothesis, also known as a false negative.