Does an Expansionary Gap or a Recessionary Gap Exist If

question 57

Multiple Choice

Does an expansionary gap or a recessionary gap exist if short-run output is $18.0 trillion and potential output is $18.2 trillion?

• A) an expansionary gap
• B) a recessionary gap
• C) both an expansionary gap and a recessionary gap
• D) neither an expansionary gap nor a recessionary gap
• E) The actual gap is equal to potential output.

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Definitions:

Null Hypothesis

A statement in inferential statistics that there is no effect or no difference, and any observed deviation from this state is due to chance.

Rejection Level

The threshold or critical value that determines whether to reject the null hypothesis in statistical hypothesis testing, often denoted by alpha.

P-value

A measure in statistical hypothesis testing that quantifies the evidence against a null hypothesis, with lower values indicating stronger evidence.

Sample Mean

The average of a set of observations or values taken from a sample of a population.