The Relationship Between the Long-Run Real Interest Rate and Potential

question 40

Multiple Choice

The relationship between the long-run real interest rate and potential output:

• A) is direct.
• B) is inverse.
• C) is constant since the long-run real interest rate is primarily determined by risk.
• D) depends on the actions of central bankers.

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Definitions:

Type II Error

A statistical error that occurs when a false null hypothesis is not rejected.

Unemployment Rate

The proportion of the workforce that is unemployed and actively seeking work.

Statistics Canada

The national statistical office of Canada, responsible for producing statistics on the Canadian economy, society, and environment.

Hypothesis Test

A method in statistics used to determine if there is enough evidence to support or reject a proposed hypothesis.