Assume the Economy Is Initially in Equilibrium Where Potential GDP

question 43

Multiple Choice

Assume the economy is initially in equilibrium where potential GDP equals real GDP.If the economy experiences a positive demand shock,increasing consumer optimism,and the Bank of Canada does not change its target short-term nominal interest rate,the ________ shifts to the right and the output gap will be ________.

• A) IS curve; positive
• B) IS curve; negative
• C) MP curve; positive
• D) MP curve; negative

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Definitions:

Probability (p)

The likelihood of a specific event or outcome occurring, expressed as a number between 0 and 1.

Hypothesis Testing

A statistical method used to make inferences or decisions about population parameters based on sample data, often involving testing an assumption or claim.

Research Hypothesis

A statement positing a relationship between variables or indicating differences among groups, which the research is designed to test.

Confirmation

The process of verifying that a theory, hypothesis, or finding is accurate and reliable through additional observation or experimentation.