A $100 Million Decrease in Government Expenditure on Goods and Services

question 90

Multiple Choice

A $100 million decrease in government expenditure on goods and services leads to an even larger decrease in aggregate demand because of

• A)induced changes in consumption expenditures.
• B)automatic fiscal policy.
• C)induced changes in aggregate supply.
• D)discretionary fiscal policy.
• E)the reinforcing effect of monetary policy.

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Definitions:

Two-tail Test

A statistical test that considers both the directions of a possible effect, testing for the possibility of positive or negative deviations from the null hypothesis.

Sample Variances

A measure of the dispersion or variability within a sample data set, which indicates how much the sample elements differ from the sample mean.

Test Statistic

A standardized value that is calculated from sample data during a hypothesis test. It's used to determine whether to reject the null hypothesis.

Two-tail Test

A statistical test where the critical area of a distribution is two-sided and tests whether a sample is greater than or less than a certain range of values.