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Suppose the Economy Is Initially in Long-Run Equilibrium

question 53

Essay

Suppose the economy is initially in long-run equilibrium.For each of the shocks listed below,explain the long-run effects on output and the price level.
(a)Labor supply decreases.
(b)The government shuts down the Bureau of Economic Analysis.
(c)Productivity increases.


Definitions:

Sample Variances

A measure of the variance (spread or variability) within a sample data set.

Null Hypothesis

A statement in hypothesis testing that there is no significant difference or effect, serving as the default assumption to be tested against alternative hypotheses.

Population Variances

A measure of the dispersion or spread of a set of data points within a population.

F-distributed

Pertaining to an F-distribution, used in statistical analysis to compare variances.

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