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Starting from Potential Output, If Firms Become More Optimistic About

question 155

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Starting from potential output, if firms become more optimistic about the future and decide to increase their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.


Definitions:

Research Hypothesis

A specific, testable prediction about the expected outcome in a study, often indicating a predicted relationship between variables.

Nondirect Relationship

A relationship between two variables where changes in one variable do not lead to consistent and predictable changes in another variable directly.

One-tailed

A hypothesis test where the area of interest is only on one side of the sampling distribution, indicating either a greater-than or less-than direction but not both.

Two-tailed

A type of statistical test that considers both directions of a possible effect, looking for deviations from a null hypothesis in two opposite directions.

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