A Critical Assumption in the Classical Model Is That

question 110

Multiple Choice

A critical assumption in the classical model is that

• A) markets are perfectly competitive in the short run
• B) markets clear in the long run
• C) markets clear in the short run
• D) markets are perfectly competitive in the long run
• E) all variables are expressed in nominal terms

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Definitions:

Dependent Variable

A variable in an experiment or model whose changes depend on the effects of other variables.

Independent Variable

A variable that is manipulated to determine its effect on a dependent variable.

Critical T Value

The threshold value in t-testing that determines whether to reject the null hypothesis, based on the desired level of significance.

Significance

The likelihood that a relationship between two or more variables is caused by something other than random chance.