The Equilibrium Effects of a Temporary Increase in Government Spending

question 19

Multiple Choice

The equilibrium effects of a temporary increase in government spending include

• A)a decrease in the real wage and an increase in the real interest rate.
• B)an increase in the real wage and a decrease in the real interest rate.
• C)a decrease in the real wage and a decrease in the real interest rate.
• D)real wages and the real interest rate remaining unchanged.
• E)an increase in the real wage and an increase in the real interest rate.

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Definitions:

Cohen

Often refers to statistical power analysis methods or effect size measures designed by Jacob Cohen, used in hypothesis testing.

Alpha

A threshold value used in hypothesis testing that determines the level of significance, often set at 0.05.

Type I Error

A Type I error occurs in hypothesis testing when a true null hypothesis is incorrectly rejected, falsely indicating a significant effect or difference when there is none.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, typically denoted as alpha.