The Interest-Rate Effect Suggests That

question 305

Multiple Choice

The interest-rate effect suggests that

• A) a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending.
• B) an increase in the price level will increase the demand for money, reduce interest rates, and decrease consumption and investment spending.
• C) an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.
• D) an increase in the price level will decrease the demand for money, reduce interest rates, and increase consumption and investment spending.

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Definitions:

Null Hypothesis

The proposition that observed differences among specific populations are attributed to errors in sampling or experimentation, hence indicating no major divergence.

Level Of Significance

The threshold chosen for deciding whether an observed effect is statistically significant, usually denoted by alpha.

Hypotheses

Plural form of hypothesis, which are propositions or statements made for the sake of argument that are tested through research and experimentation.

Significance Level

The probability of rejecting the null hypothesis when it is actually true, often denoted by alpha and used as a threshold in hypothesis testing.