When All Prices (Including Wages) Have Fully Adjusted to Previous

question 69

Multiple Choice

When all prices (including wages) have fully adjusted to previous shifts in aggregate supply or demand and the flow of spending, saving, borrowing, and lending will continue until something else changes, this is called

• A)the substitution-of-foreign-goods effect.
• B)the wealth effect or real-balances effect.
• C)the constant nominal income effect.
• D)long-run equilibrium.

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Definitions:

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated, potentially distorting the model's estimations.

Standard Errors

The standard deviation of the sampling distribution of a statistic, measuring the accuracy with which a sample estimate represents the population parameter.

Parameter Estimates

Statistical values calculated from data that are used to represent certain characteristics of a population.

Level of Significance

A statistical measure that defines how strong the evidence must be to reject the null hypothesis in a hypothesis test.