To Achieve Long-Run Equilibrium in an Economy with a Recessionary

question 37

Multiple Choice

To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:

• A)increase.
• B)decrease.
• C)not change.
• D)either increase or decrease depending on the relative shifts of AD and AS.

---

Definitions:

Drowsiness

A state of feeling abnormally sleepy or tired, often leading to decreased alertness and slower reaction times.

Population Proportions

The fraction of individuals in a population that belong to a specified category or group.

Interval Estimate

An estimate of a population parameter that is given as a range of values, offering a level of confidence in the estimate's accuracy.

Hypotheses Testing

A method of statistical inference that is used to decide whether the data at hand sufficiently support a particular hypothesis.