In the IS-MP Model,when the Fed Increases the Real Interest

question 80

Multiple Choice

In the IS-MP model,when the Fed increases the real interest rate

• A) the MP curve shifts up resulting in a decline in the output gap.
• B) the MP curve shifts up resulting in an increase in the output gap.
• C) the MP curve shifts down resulting in a decline in the output gap.
• D) the MP curve shifts down resulting in an increase in the output gap.

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Definitions:

Degrees of Freedom

The number of independent pieces of information that go into the estimation of a parameter or calculation of a statistic.

Normal Distribution

The probability distribution is evenly spread around the mean, signifying more frequent occurrences of data points near the mean than those that are more distant.

Exponential Distribution

The exponential distribution is a continuous probability distribution that is often used to model the time between events in a process that occur continuously and independently at a constant average rate.

Confidence Interval

A range of values, derived from sample data, that is likely to contain the value of an unknown population parameter with a specified level of confidence.